The recent exchange rate forecasts for the Canadian dollar (CAD) against the Israeli new shekel (ILS) suggest a complex intertwining of factors that could impact future movements. Analysts have noted the CAD's firming following Prime Minister Mark Carney's passing of his first budget. However, concerns regarding oil price fluctuations are paramount, especially as Canada is a major oil exporter. Currently, oil prices are trading at $64.89, which is 1.1% below a three-month average of $65.62. Given that the CAD is closely linked to oil dynamics, further drops in crude prices could result in a depreciation of the loonie.
On the monetary policy front, the Bank of Canada has implemented significant interest rate cuts, reducing rates to 2.25% in response to an uncertain economic landscape and a weakening job market. Such measures typically discourage foreign investment, placing downward pressure on the CAD. Moreover, recent U.S. labor data indicating substantial job cuts could indirectly bolster the CAD as it raises expectations for a Federal Reserve rate cut, potentially benefiting the Canadian economy.
In contrast, the Israeli new shekel has shown resilience and strength, having appreciated approximately 9.3% against the U.S. dollar in the second quarter of 2025. Factors influencing the ILS include a declining inflation rate of 2.5%, which may lead the Bank of Israel to consider interest rate cuts to stimulate growth. The resolution of the ceasefire in Gaza has also contributed to a reduced risk premium for the shekel, making it more attractive to investors.
Overall, the CAD is trading at 2.3487 ILS, which is 1.1% below its three-month average of 2.3746, highlighting a relatively stable recent range. The interaction of Canadian interest rate adjustments, oil price trends, and Israeli economic fundamentals will be critical for future CAD/ILS exchange rate movements. Market participants should closely monitor these developments to navigate the potential volatility in the currency pair.
