USD/ILS Outlook: Likely to decrease, given its position below the recent average and near recent lows.
Key drivers:
• Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with the Bank of Israel's recent surprise rate cut, favoring a stronger shekel against the dollar.
• Risk/commodities: The weakening US dollar is reflected in a decline in demand for US assets, influenced by global geopolitical tensions.
• One macro factor: Israel’s economic outlook improved, as UBS lowered USD/ILS forecasts due to reduced geopolitical risk premiums and strong local fundamentals.
Range: The USD/ILS is expected to drift within its recent range, potentially testing lower extremes.
What could change it:
• Upside risk: A stronger-than-expected US jobs report could boost the dollar.
• Downside risk: Further rate cuts by the Bank of Israel may strengthen the shekel further against the dollar.
