Shekel Finds Poise, Central Bank Chief Flags Risk Of More Rate Hikes

Spot USD/ILS trades -150 pips at ILS3.7147 as Bank of Israel Governor flagged potential for further rate hikes, depending on FX developments. From a technical standpoints, bears look for losses towards the 50-DMA, which kicks in at ILS3.6419. Conversely, bulls see May 26 high of ILS3.7505 as their initial target.

• BoI Governor Amir Yaron said at a conference in Jerusalem that there has been "excessive depreciation" of the shekel and should this trend continue, the central bank might have to deliver more rate hikes. The official added that the current level of interest rates is "restrictive" and reiterated that the government's controversial judicial overhaul has hurt the economy.
• Goldman Sachs have revised their ILS forecast lower, citing Israel's continued political uncertainty and BoI Deputy Governor Andrew Abir's comments last week, which in their view reduced the odds of the central bank deploying FX interventions.
• The IDF started a large-scale military drill yesterday, which involves troops from nearly all units and simulate an all-out multi-front war. The army said the exercises will last for two weeks and have not been provoked by any new security assessments.