The shekel has weakened moderately this morning, with November's Consumer Price Index reading awaited later today. The shekel-dollar rate is up 0.22%, at NIS 3.9127, and the shekel-euro rate is up 0.13%, at NIS 4.8619/€. On world markets the US dollar has weakened against the other major currencies.
The Consumer Price Index is expected to show a 0.3% fall for November. The index reading will be an important factor in the Bank of Israel's interest rate decision for January. In the past few months, the central bank has indicated that it does not rule out the use of quantitative easing to raise inflation to within the government's price stability target range of 1-3% and stimulate economic growth.
"After 18 weeks in which the shekel-dollar rate has risen, last week it fell for the first time since August," FXCM Israel notes in its market review this morning. "The main trigger for the sharp decline is widespread profit taking, on both the local and global markets, as the year end approaches. This is a pattern that typifies the period leading up to the Christmas and New Year holidays, and this year, because of the extreme movement we have seen in the shekel-dollar rate, the correction is particularly sharp. After the failure to break through the psychologically significant NIS 4/$ level, traders opted to safeguard the profits on long positions that had notched up huge gains in the second half of 2014."
Published by Globes [online], Israel business news - www.globes-online.com - on December 15, 2014
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