Shekel Tumbles Amid Reports That Judicial Overhaul Talks Collapsed

Israeli assets took a hit as local media reported that last-minute negotiations on the government's judicial overhaul have collapsed. This comes after hopes for a negotiated outcome helped the shekel top the EMEA pile in morning trade. USD/ILS now trades +173 at 3.6428, recovering from its intraday low of 3.5804.

• N12 News ran a report citing politicians from both sides of the aisle. who conceded that efforts at reaching some sort of compromise over the key elements of the government's controversial judicial overhaul have failed. Opposition leader Yair Lapid confirmed this to reporters gathered in the Knesset.
• The latest reports came after President Isaac Herzog suggested that "there is a possible basis for understandings" even as "there are still gaps that require the various sides to display responsibility." His comments offered a ray of hope, lending some support to the shekel this morning.
• Following the collapse of negotiations, the Knesset is set to hold a final vote on the "reasonableness bill," a key element of the wider judicial overhaul that would limit the ability of courts to scrutinise the conduct of elected officials. The bill is expected to be passed as the opposition pledged to boycott its third reading.
• The impending adoption of the bill brings a suite of familiar (geo)political risks to the fore. The judicial overhaul has weighed on Israel's relations with the US, sparked widespread street protests, and created security risks with numerous IDF reservists refusing to show up for duty.
• Mossad chief David Barnea reportedly told the agency's employees opposed to the reforms that "if the situation reaches a constitutional crisis, I'll be on the right side, but right now isn't the time."