The exchange rate for the Canadian dollar (CAD) to Israeli shekel (ILS) has recently experienced downward pressure, currently positioned at 90-day lows near 2.3668. This represents a decline of 2.8% from its three-month average of 2.4346 and reflects a volatility range of 6.1% within the past three months. Analysts attribute this weakness primarily to notable declines in oil prices. The CAD, being heavily influenced by commodity prices, has struggled as oil prices dropped to a four-month low, trading at approximately $60.48 per barrel. Experts suggest that ongoing concerns regarding oversupply ahead of the upcoming OPEC meeting could continue to affect the CAD negatively.
In addition to oil price declines, the CAD is facing challenges from weaker manufacturing data, with the S&P Global Canada Manufacturing PMI showing contraction. This situation, coupled with speculation surrounding potential rate cuts from the Bank of Canada due to a sour economic outlook, intensifies concerns over the loonie's near-term prospects. A Reuters poll posits that anticipated interest rate cuts by the U.S. Federal Reserve could provide some support to the CAD against a potentially weakening U.S. dollar. However, the overall sentiment remains cautious, especially with the uncertainty surrounding trade agreements affecting the CAD's outlook.
Conversely, the ILS is influenced by geopolitical tensions and the monetary policy set by the Bank of Israel. The shekel suffered from military operations in Gaza earlier this year, which led to a depreciation as investor confidence waned amid regional instability. The Bank of Israel's recent stance to maintain its benchmark interest rate indicates a cautious approach to economic stability, with forecasts suggesting limited room for rate cuts until the end of the year.
Taken together, current market conditions highlight the interconnectedness of oil price movements, central bank policies, and geopolitical stability in shaping the CAD/ILS exchange rate. While oil prices remain volatile, with the recent Brent Crude OIL/USD transaction showing a decline to $65.22, 3.9% below its three-month average, traders should remain alert to the unfolding developments that could impact both currencies in the short term.
