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FXCM: Shekel unlikely to break NIS 4/$ barrier in 2014

The shekel is flat against the dollar and weaker against the euro inter-bank trading this morning. The shekel-dollar exchange rate is up 0.06% against the dollar at NIS 3.947/$ and 0.16% up against the euro at NIS 4.881/.

Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.944/$ , down 1.18% on yesterday’s rate, and set the shekel-euro representative exchange rate at NIS 4.873/, down 0.407%.

FXCM Israel research department said this morning, “The shekel-dollar exchange rate has stabilized this morning around NIS 3.945/$ after a sharp retreat yesterday. The failure at the start of the week to breach the key NIS 4/$ barrier has paved the way for a wave of profit-taking that saw the exchange rate fall sharply. At the moment the sharp retreat is mainly the result of profit-taking by long traders who probably thought that the one-sided extreme of these market positions was too risky. Worldwide too, we have seen over these past few days a wave of dollar profit-taking. This is a dynamic typical of the end of the year when traders prefer realizing their profitable positions, and there can be no doubt that buying dollars for shekels was the most profitable transaction in the second half of 2014.”

FXCM added, “The likelihood that the market will break through the NIS 4/$ barrier this year is not high. We are nearing the Christmas and New Year holiday and in the next two weeks trading volumes on the global and domestic markets will begin to thin , there will be few fundamental triggers, and in these conditions, it will be difficult to gain the momentum to breach this critical.”

“However, looking ahead, due to growth gaps, interest rate expectations between the US and Israel, and the fact that Israeli is starting an election campaign, the shekel-dollar exchange rate is expected to continue to rise and sooner or later break above NIS 4/$ , and to consolidate above this level during 2015.”

Published by Globes [online], Israel business news – www.globes-online.com – on December 10, 2014

Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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