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Shekel Edges Lower Ahead Of BoI's First Wartime Rate Decision


Spot USD/ILS remains on an uptrend ahead of today's Bank of Israel rate decision. The pair trades at 4.0621, up 43 pips on the day, struggling to test last Friday's high of 4.0815. A break here would expose 4.0980, the high print of Jul 26, 2012. Today's uptick is likely facilitated by broader demand for the greenback amid higher US Tsy yields.

  • Consensus (14/15 analysts surveyed by Bloomberg) looks for no change to the base rate today, which is supported by recent comments from Deputy Governor Andrew Abir, who told economic forecasters that the central bank prioritises FX stability. Bank Leumi are the only ones forecasting a 25bp cut in the Bloomberg poll, while their analyst David Reznik told Globes that "the understanding that the war in the south is going to be long, with broad implications, such as a sharp economic slowdown, led to the view that the interest rate needed to fall". Today's rate decision, due at 14:00BST/16:00IDT will be accompanied by fresh macroeconomic forecasts.
  • Reports are doing the rounds that the US has advised Israel to hold off on a ground invasion of the Gaza Strip to leave more time for negotiations on the release of hostages held by Hamas and for the delivery of humanitarian aid to the enclave.

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