Israel's Consumer Price Index reading for February will be released today at 18:30. The reading is expected to be negative, and could lead to a further interest reduction by the Bank of Israel, and possibly even to a negative interest rate, according to investment house Halman Aldubi.
Halman Aldubi notes that the global currency war is worrying many investors in Israel and around the world, the main concern being the effect of the strong dollar on the rate of economic recovery in the US. In Israel, the shekel has weakened against the dollar, but continues to strengthen against the euro, which could affect that Bank of Israel's next interest rate decision.
In the US, trading on Wall Street was marked by high volatility last week, because of investors' nervousness over the strength of the dollar. "In our view, since the US economy is oriented towards domestic consumption, that strong dollar does not represent one of the conditions for the US Federal Reserve to postpone an interest rate hike. We believe that recent falls on the US stock market are temporary, and that in the light of the low interest rates and the growth trend, the market will continue to rise."
In Europe, European Central Bank president Mario Draghi is radiating optimism, and claims that improvement can already be seen in growth and economic activity. European stocks continued to rise last week, and will probably continue to provide positive returns for investors as long as the European Central Bank's quantitative easing program remains in place. The weakening of the euro favors European exporters. "We recommend exposure to European stock indices," Halman Aldubi writes.
Published by Globes [online], Israel business news - www.globes-online.com - on March 15, 2015
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