Shekel Stays On Back Foot Amid Worries Over Israel's Credit Rating

USD/ILS price action hit a ceiling around the 3.72 figure this morning and has unsuccessfully tested this level multiple times over the past few hours. The rate last deals +525 pips at 3.7105, with bulls keeping an eye on Jun 30 high of 3.7308.

• The shekel remains exposed to the fallout from yesterday's adoption of the "reasonableness" bill. There is concern about a potential credit rating action after Moody's said it would issue an unscheduled special report on Israel later today in an unusual move.
• Separately, Morgan Stanley downgraded Israel's sovereign credit to a "dislike stance," due to "increased uncertainty about the economic outlook in the coming months and risks becoming skewed to our adverse scenario."
• Citi's Michael Wiesen wrote that "the situation is getting more tricky and more complicated" and flagged the elevated risk of a constitutional crisis and warned of a potential downward revision to Israel's credit rating outlook.
• Israeli financial daily Globes cited an FX market source today, who said that "the foreigners are in shock. They were sure that there would be a compromise."