It certainly was a week with plenty to deal with, including the Sky officially becoming the limit for one lucky Israeli venture fund. Not all the news was as fortuitous, however, as a new round of trade war threats out of the US sent the markets reeling – something very much on the radar at the IsraTransfer Trading Desk. Elsewhere, the mortgage market heated up in the month of July, and Bank of Israel prepares to declare the economy back on track. All that and more in our final edition Israel Business Week Roundup of 5778, so read on and let’s get to it.
From the IsraTransfer Trading Desk
“How the mighty have fallen” has certainly been the theme when it comes to the USD/NIS over the past month and a half. After an impressive run up to the 3.73 range just over two weeks ago, the rate has with much disappointment retraced its way all the way back to the 3.60 level, having now given up virtually all its gains since in the third week of June. Following last week’s comments from the Bank of Israel regarding inflation, shekel stability, and the reconfirmed prospects of a November interest rate hike, the fundamentals are now in place for a significantly stronger shekel going forward.
Additionally, from a technical trading perspective the USD/NIS is now sitting at a key level of support, which should it fail to hold, has the the potential to result in a trip back to 3.56. With an economic calendar void of any major US announcements this week, traders will once again find themselves at the mercy of the news headlines, namely those related to US trade wars and the potential for at least 10% of US imports to be hit by new tariffs should President Trump’s new proposals go into effect.
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Bank of Israel Representative Exchange Rates
For the Week of August 27th thru August 31, 2018
|Currency||Symbol||Week High||Week Low||Week Close|
|South African Rand||ZAR/NIS||0.2583||0.2439||0.2444|
This Week’s Notable Economic Announcements
|Tuesday, September 4th||AUD||RBA Cash Rate Target|
|Tuesday, September 4th||CAD||Canadian Manufacturing|
|Wednesday, September 5th||AUD||Gross Domestic Product|
|Wednesday, September 5th||CAD||Bank of Canada Rate Decision|
|Thursday, September 6th||CHF||Gross Domestic Product|
|Friday, September 7th||GBP||Inflation – Next 12 Months|
|Friday, September 7th||CAD||Employment/Unemployment|
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Israel Economy Snapshot
Despite a slight setback in the second quarter, Israel’s economic growth keeps on pushing onward. In its most recent comments the Bank of Israel maintains that accelerated economic growth in the third quarter has resumed. In fact, as we mentioned previously, the slowdown in Q2 now appears to be merely an outlier due to unusually high automobile and other vehicle imports. As such, the belief that there has been no change in economy’s upward trend has now only been bolstered. Of note, the labor market continues to remain firm supported by wages rising at a steady pace, in particular in the business sector which is set to announce its confidence score this coming Wednesday.
Another interesting economic indicator to keep an eye on this week should be seen in the release of BoI’s most recent foreign currency reserves due out on Thursday. Although last month purchases of new assets declined, shekel weakness versus the US dollar actually resulted in an increase in holdings due to the favorable exchange rates. That said, as we mentioned above, recent shekel strength should most likely eliminate that from the equation this month, so it will be interesting to see where the coiffers stand following the release of the most latest data.
Interest Rate Update
Not surprisingly, no changes resulted from last week’s latest Bank of Israel interest rate decision, as BoI continued its trend of leaving interest rates alone yet again – now for a staggering 41 consecutive months. That said, the run appears to be headed for an end in the months ahead, with a quarter point increase planned at the November meeting. Taking credit (pun intended) for the long anticipated hike is the recent uptick in inflation. Now at 1.4%, the key economic indicator officially finds itself in the 1-3% target range (albeit on the lower end), signaling not only an increase in November, but a potential additional one to come in 2019. Although inflation is the key to future interest rate hikes, Bank of Israel’s research department does warn that prolonged time spent in its inflation target range could result in a sharp appreciation in the Israeli currency, which would certainly be an unwelcome sight for those looking to convert their foreign funds to shekels.
Israel Real Estate Report
“The downward trend in home prices, which began approximately a year ago, has halted.” were the words of Bank of Israel in its encouraging outlook for the long slumping real estate market. Evidence of the central bank’s positive claim were apparent in the release of economic data that showed a strong rise in mortgage taking during the month of July. In fact, the 5.8 billion NIS total represented an over 25% increase from the monthly average over the past year. While summer is typically an active time for mortgages due to consumer desire to close deals prior to the school year, the most recent increase is seen to be caused by the growing popularity of the government’s Buyer Fixed Price Plan (Machir Lamishtaken), enabling families to purchase homes at lower-than-market prices. Currently, the program is accounting for nearly 10% of all new mortgages, with many more anticipated as more lottery winners are announced and housing projects are completed. More on Mechir Lamishtaken, including upcoming lotteries can be found on the government’s official website.
Ok, consider yourself all caught up. Wishing everyone a very prosperous week, and a happy, healthy new year from IsraTransfer. L’shanah Tova!
Looking for the easiest way to transfer money to Israel? IsraTransfer is Israel’s leading currency exchange firm specializing in wire transfers of US dollars (USD), British sterling (GBP), Canadian dollars (CAD), Euros (EUR), and more to Israel. Founded in 2008, and with over 1 billion NIS exchanged, we are the exclusive operators of the AACI Currency Exchange Program.