Recent forecasts indicate a bearish sentiment for the USD against ILS, with the exchange rate currently at 90-day lows around 3.2215, which is approximately 2.9% below its three-month average of 3.3173. Analysts attribute this decline to a combination of factors, including a dovish outlook from the Federal Reserve and improving conditions for the Israeli economy.
The US dollar is under pressure as expectations grow for a Federal Reserve rate cut, particularly following the latest ADP employment data that revealed an average weekly job loss of 11,250 in recent weeks. This signals a weakening labor market and may lead to a dovish consensus as Fed policymakers speak in the coming sessions. The transition in Fed leadership and upcoming inflation data are also influencing the dollar's downward trend.
In contrast, the Israeli New Shekel has shown resilience, with a significant appreciation of approximately 9.3% against the US dollar over the second quarter, bolstered by reduced geopolitical risk premiums following recent ceasefires and a decline in inflation. The Bank of Israel's inflation rate for September showed a drop to 2.5%, which could open the door for potential interest rate cuts.
UBS analysts have revised their forecasts, projecting a stronger shekel due to the underlying economic fundamentals and decreased risk perceptions related to regional stability. These elements combined suggest that the ILS could continue to gain against the USD in the near term, contributing to a fairly stable trading range between 3.2215 and 3.4188. Investors and businesses involved in international transactions should consider these trends when engaging in currency conversion to potentially secure more favorable rates.
