Shekel Sits Atop EMEA Pile Despite Ongoing Political Crisis

Spot USD/ILS has traded with a bearish bias today even as Israel's domestic political crisis brews on, while Moody's joined other major credit rating agencies in warning against the consequences of the country's planned judicial overhaul. The rate last operates at ILS3.5952, down 154 pips on the session, with bears looking for losses towards Mar 6 low of ILS3.5762.

• We have seen upswings in short-end USD/ILS implied volatilities today, with one-week tenor hitting its best levels since the Mar 3 cyclical peak. Further out the curve, one-month contracts have retraced their initial uptick, while six-month and one-year maturities have seen some mild reduction in implied volatilities.
• The Times of Israel reported that Prime Minister Netanyahu has ramped up pressure on just Justice Minister Levin to seek compromise over the controversial reforms of the judiciary. Local reports suggesting that Netanyahu repeatedly warned Levin of the negative consequence of the judicial overhaul might be lending some support to the shekel.
• Meanwhile, Moody's warned that the contentious changes to Israel's legal system "could materially weaken the strength of the judiciary and as such be credit negative," which came after similar comments from Fitch Ratings and S&P Global.