Shekel Regains Poise Amid Diminished Concern Over Tensions With Iran

The shekel gets some reprieve today, gaining over 1% versus the greenback, as the risks of an immediate major escalation in the Iran-Israel conflict has seemingly eased. The pair last sits at 3.7200, nearly 400 pips lower on the day, with bears seeking a sell-off past Apr 8 low of 3.6764. USD/ILS implied volatilities have pulled back from cyclical highs across most of the maturity curve, save for an upswing in overnight volatility. The TA-35 Index sits 0.75% above neutral levels.

• The barrage of missiles and drones fired by Iran towards Israel failed to inflict much material damage, with most of the projectiles neutralised before they reached Israeli territory. Both sides claimed success, which has been interpreted as a sign that they might seek to de-escalate. That said, source reports suggested that Israel's war cabinet appeared to be leaning towards a retaliatory strike, with no consensus over "when and how."
• Israel will report March unemployment data at the top of the hour, with CPI due to follow at 16:30BST. Consensus looks for an uptick in headline inflation to +2.6% Y/Y in March from +2.5% prior.