The Chagim may be over, but there’s still plenty to rejoice over, including our latest currency trading outlook from the IsraTransfer Trading Desk. Plus, things may be getting more interesting at the Bank of Israel in the week to come, and school’s in session for some serious blockheads. All that and more, so let’s get down to business – it’s our latest edition of The IsraTransfer Report.
From the IsraTransfer Currency Trading Desk
What a difference a month can make. After surging to its highest levels in 18 months, lighter volume over the Chagim, along with a stronger US dollar, has the shekel back to its weakest point since late August. Although an interest rate increase by the Bank of Israel is quite possibly headed our way at next Monday’s meeting (more on that later), we are confident that the move has already been well factored in. Some recent speculation that the increase could be put on hold has begun to circulate as of late, so that is one key item to keep an eye on.
From a technical trading perspective, the USD/NIS is now residing around a key level of resistance at 3.66. Should it manage to successfully break through, we could be looking at a potential return to the 3.71 region last seen back on August 18th. On the flip side, should the shekel return to the strengthening trend we saw in late September, a trip back down to 3.58 could be in the cards.
That said, we see a stronger US dollar going forward, especially in light of President Trump’s recently announced trade deals, which could be a harbinger of more agreements to come. Given the potential for more game-changing news that could strengthen the USD, our best guess is a more favorable exchange rate for those looking to convert US dollars to shekels in the month to come.
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The Real Deal
Enthusiasm around the Israel housing market looks to be picking up steam, as new mortgage taking during the second quarter of 2018 topped over 14.5 billion NIS – including nearly 6 billion NIS in the month of July alone. Although Bank of Israel considers the July figure to be unseasonably high, the second quarter total amounted to a 12% increase over the same period in 2017.
Among the largest contributors to the spike, especially in July, was the Ministry of Finance’s Buyer Fixed Plan (Mechir Lamishtaken). With more of the program’s new housing projects being completed, winners from the program’s late 2016 and early 2017 lotteries are now entering into the mortgage-taking stage as they prepare to assume ownership of their new homes. Currently the Buyer Fixed Plan only accounts for 10% of the mortgage market, however, that number is expected to grow substantially in the months and years to come, and presumably along with new mortgages as well.
Take a Hike
Interest surrounding a Bank of Israel meeting is expected to be at its highest in over three years when the government’s central bank meets next Monday to announce an interest rate increase for the first time since 2015. The meeting will also mark the final one for Governor, Karnit Flug, who announced earlier this year that she will not be seeking another term.
Although several economists actually believe raising interest rates may not be the best course of action given the recent struggles for inflation to remain within the government’s annual 1%-3% target range, the chance of a months-long postponement could be negated by Flug’s departure, and the uncertainty surrounding who will replace her. Additionally, the United States’ policy of higher interest rates also appears to be forcing BoI into taking action, which consequently is only adding to the intrigue.
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Building Blocks of the Future
It would appear that Tel Aviv Uninversity is taking online learning to a whole new level. Aiming to become pioneers in the research and teaching of blockchain technologies, the school has announced the official unveiling of its new Hogeg Institute for Blockchain Applications. The initiative, a first-of-its-kind in Israel, will work to promote research, instruction and the sharing of knowledge regarding blockchain technology and the emerging cryptocurrency field. The Hogeg Institute for Blockchain Application will officially be part of Tel Aviv University’s Coller School of Managment, with start-up funding of 7 million NIS donated by was donated by technology entrepenuer, Moshe Hogeg, an experienced investor in both digital currencies and blockchain technologies worldwide.
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