Shekel Ends Three-Day Recovery

USD/ILS found support and snapped a three-day losing streak amid risk-off conditions today. The shekel remains exposed to the fallout from the judicial overhaul saga, although it seems that much of the associated political risk has been already priced into Israeli assets. The implications for the combat readiness of the IDF continue to draw attention, as Defence Minister Yoav Gallant reportedly told his colleagues that the nation's air force needs "two components: American planes and Israeli pilots," in a thinly veiled reference to US diplomatic backlash and protests of Israeli reservists in response to the judicial overhaul.

• On a positive note, Bank of America's Bernard Mensah told Globes that the "economy in Israel is dynamic and driven by the technology industry" and "despite Israel’s special social and political challenges, [the expected GDP growth of +2.5% Y/Y this year] is still faster than we are seeing in many other parts of the world."
• Spot USD/ILS has added 216 pips so far and trades at 3.6535. The familiar technical contours remain intact, with bulls looking for a break above Jul 27/Jun 30 highs of 3.7300/08 before targeting Jun 2 high of 3.7551. Bears eye support from the 200-DMA, which kicks in at 3.5711.