Shekel In Retreat Amid Risk Of Collapse Of Judicial Overhaul Talks

The shekel has tumbled as Israeli opposition leaders cried foul over PM Netanyahu's plan to effectively delay a vote on the selection of Knesset representatives to the Judicial Selection Panel, which puts the ongoing judicial overhaul talks on the brink of collapse. The Israeli currency is the worst EMEA performer today, by comfortable margins.

• The two seats on the JSC filled by the Knesset are traditionally split between the two sides of the aisle, but Netanyahu struggled to ensure that the opposition nominee would get enough support from his own MKs as hardliners from his coalition insisted on taking both seats.
• Opposition leaders Benny Gantz and Yair Lapid reiterated that they would quit the ongoing talks on the government's judicial overhaul if both remaining candidates to the JSC are rejected, which would significantly exacerbate political tensions within the country.
• The upcoming vote poses a risk to Netanyahu himself, as the decision will be made by secret ballot. If some of the members of his coalition defect and vote in favour of the two candidates on the ballot, his ability to control the fractured coalition would be called into question.
• When this is being typed, spot USD/ILS trades at ILS3.6330, up ~710 pips (~2%) on the session. Buying impetus lost steam at ILS3.6522 but bulls look for renewed purchases towards Jun 2 cycle high of ILS3.7551. Bears eye near-term support from ILS3.5287.