Trade overview: current reports, trends, indices, stock prices, bonds, foreign exchange and commodities and analyst recommendations
The turmoil in the foreign exchange market continues today, and the dollar climbs by 1% against the shekel after already jumping by 2% in the last week alone. The dollar is trading around 3.34 shekels. The euro is also losing ground against the dollar, and its rate is 99 cents (after equal to the dollar).
The shekel also retreated against other currencies. The euro strengthens by 0.6% to a rate of NIS 3.33 and the British pound rises by 0.2% to a rate of NIS 3.88.
The dollar is now strengthening after hitting a four-month low at the beginning of the month. The declines in the markets since Fed Chairman Jerome Powell’s speech in Jackson Hole on the weekend are sending investors to safe assets, led by the dollar.
Matan Shatrit, an economist at Psagot Investment House, noted that “in recent days the dollar has returned to strengthening globally, and also against the shekel, against the backdrop of the change in sentiment in the markets that began on Friday with the Fed Chairman’s speech in Jackson Hole which was sharp, precise and very hawkish. The trend continued last night with the publication of the vacancy report in the US, which indicated the continued strengthening of the labor market, which supports continued aggressive monetary tightening by the central bank.”
“In the short term, the direction of the shekel is mainly determined by the direction of the global markets, with the main reason for this being the exposure of the institutions. The declines in the markets force the institutional bodies to purchase foreign exchange in order to maintain the required rate of exposure to foreign exchange, in other words, the demand for dollars strengthens. It is important to note that the basic factors such as a surplus in the current account and real investments in the Israeli economy continue to support a strong shekel in the long term, but in our estimation in the short term the volatility in the markets will continue and will continue to support the depreciation of the shekel in the coming weeks and months,” concluded Shetrit.