Shekel On Back Foot Ahead Of BoI Rate Decision, Knesset Budget Votes

Spot USD/ILS trades at ILS3.6530, around 107 pips higher on the day, with the central bank's monetary policy decision and the budget debate in the Knesset stealing the limelight. Bulls look for a move through May 12 high of ILS3.6813 and Apr 12 high of ILS3.6934 before targeting Mar 20 high of ILS3.7130. Bears keep an eye on May 2 low of ILS3.6049.

• Prime Minister Benjamin Netanyahu reached an eleventh-hour agreement with a Haredi faction of United Torah Judaism, which demanded additional funding for religious schools. The Knesset started its 35-hour budget debate, which will conclude tomorrow night and be followed by a voting marathon. The coalition must pass the budget by May 29 or face a fresh election.
• Israel's unemployment rate fell to 3.6% in April from revised 3.8% in March, according to data from the Central Bureau of Statistics, which confirms that the local labour market remains tight.
• This comes ahead of a monetary policy decision from the Bank of Israel (14:00BST), who are widely expected to raise the base rate by 25bp to 4.75%. The case for a hike was cemented by last week's expectation-busting CPI & GDP data.