Shekel Sits Near Bottom Of EMEA Pile

The shekel trades on the back foot, with spot USD/ILS last seen +123 pips at 3.7183, as optimism about the potential Saudi-Israel normalisation subsided. US officials poured cold water on the initial reaction, with NSC spokesman noting that "there is no agreed-to set of negotiations, there's no agreed-to framework to codify normalisation." From a technical perspective, a break above Aug 8 high of 3.7319 would allow bulls to take aim at Jun 2 cycle high of 3.7551. On the flip side, the focus is on Aug 2 low of 3.6258, followed by the 200-DMA at 3.5758

• Fitch is expected to publish its decision on Israel's sovereign rating after Israel Hayom reported that it could happen in early August. Globes reports that "the consensus remains that Fitch will not take any actual measures to cut Israel's rating or its outlook," as the agency "has so far put most of the weight on economic indicators" rather than political developments. An official who met with Fitch told Globes that "he believes that the rating agency will make do with warnings about the uncertainty in Israel and will not lower the rating outlook." Their market source "estimates the odds that Fitch will lower the rating outlook is 30%," while another market source "prices the risk of downgrading the rating outlook a little higher at 50%-50%."