The shekel is mixed against the major currencies at the opening of the week's trading on the foreign exchange market this morning. The shekel-dollar exchange rate is currently up 0.37% in comparison with Friday's representative rate, at NIS 3.835/$, and the shekel-euro rate is down 0.11%, at NIS 4.256/€.
FXCM Israel says in its market review this morning, "After testing the critical NIS 3.80/$ level last week, the shekel-dollar pair continues to correct upwards and is traded around the NIS 3.84 level, following better than expected employment numbers released in the US on Friday. The employment report showed that 255 thousand jobs were added in the US economy in July, and the June figure was revised upwards to 292 thousand. The unemployment rate fell to its lowest since the 2008 crisis, and, just as importantly, hourly pay rose by more than expected, fueling inflation expectations. In the light of this, we saw a rise in interest rate expectations as reflected in the futures market. Following the positive report, the futures market priced in a 47% chance of a dollar interest rate rise in December, which compares with 32% before the report.
If the positive figures on the US economy continue to flow, this will further strengthen expectations of a dollar interest rate rise, and boost the dollar against other currencies, the Israeli shekel among them. In the coming week, the markets will follow closely the economic diary in the US and public statements by US Federal Reserve officials.
The turnaround in the shekel-dollar pair after it found support at NIS 3.80 essentially maintains the range in which the pair has been traded since mid-May, between NIS 3.80/$ and NIS 3.90/$. Should the shekel-dollar rate rise above NIS 3.84/$, this is likely to give the pair additional upward momentum."
Published by Globes [online], Israel business news - www.globes-online.com - on August 8, 2016
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