Shekel Finds Poise Despite Plenty Of Political Risk Ahead

The shekel has partially corrected yesterday's sell-off even as Israel prepares for more political uncertainty in the weeks ahead. Spot USD/ILS trades at ILS3.6082, down 111 pips on the day, with bears looking for a clean break below the 200-DMA at ILS3.5488. Bulls keep an eye on Jun 2 high of ILS3.7751.

• USD/ILS risk reversals continue to creep higher across the curve, representing a bullish shift in the sentiment of options traders. Short-term USD/ILS implied volatilities have ticked higher today.
• Israeli lawyers are electing the head of the Bar Association (IBA), which has two representatives in the Judicial Selection Committee. Small polling stations close at 17:00 and large ones at 20:00, but the IBA has asked Justice Minister Levin to extend voting hours amid long queues and logistical issues.
• For clarity, there is no fixed time for the release of IBA election results, but the vote count may not be completed until Wednesday morning. A candidate needs to get at least 40% of the vote to become IBA head, otherwise the two leading candidates advance to a run-off.
• Anti-judicial overhaul protest leaders said they were on alert after the coalition said it would unilaterally press ahead with parts of the legislation, effectively burying talks with opposition parties.
• Israel's economy may have returned into expansion in May, with Bank Hapoalim PMI rising to 50.2 from 48.9 recorded in April.
• The Bank of Israel will unveil its monthly CPI forecast later today.