Shekel Outperforms Despite Little In Way Of Positive Local Catalysts

Spot USD/ILS loses altitude owing to the continued erosion of broader greenback strength. The shekel sits atop the EMEA pile as we type, despite the lack of any evident positive domestic headlines. The direction of further evolution of Israel's judicial overhaul remains an open question, with the market hoping for an eventual resumption of negotiations.

• The rate last deals at 3.6028, down 344 pips on the day. Bears look to force a breach of the nearby 200-DMA, which kicks in at 3.5637 and supported price action in mid-June. Bulls need a rally above Jun 30 high of 3.7308 and towards Jun 2 high of 3.7551 to regain control.
• The government sharpened the bill removing judicial review of the reasonableness of decisions taken by elected officials, which is currently being debated in the Knesset. The new version of the bill will shield officials from court orders to convene committees, potentially enabling the Justice Minister to refuse to convene the Judicial Selection Committee (JSC).
• The High Court will hear a petition which requests removing Prime Minister Netanyahu from office over a conflict of interest agreement he signed during his ongoing corruption trial. The Court said the "petition will be moved to a discussion as soon as possible."
• Bloomberg cited a BNY Mellon note, which suggested that the shekel was "undervalued and it will likely recover as US rate expectations peak." They see the ILS "in a good position to strengthen" as "the carry trade is unwinding globally - and as the shekel is considered a savings-heavy funding currency."
• Israel's trade deficit narrowed to $2.130bn in June from the revised $2.628bn before.