Forex Capital Markets Israel: shekel/euro rate sinks further

According to Forex Capital Markets Israel (FXCM), investors are looking for assets with a higher yield, which are not to be found in the euro at the moment.

The shekel has further strengthened against the euro yesterday morning. The shekel/euro exchange rate was 0.79% lower in comparison with Sunday’s representative rate, at NIS 4.1499/€. The shekel/dollar rate is up 0.12%, at NIS 3.7807/$.

Forex Capital Markets Israel says in its market review this morning that despite the announcement of the agreement with Greece and the positive response by stock markets, the euro’s value has decreased in the past 48 hours. What occurred was that as soon as it was established that Greece wouldn’t leave the Eurozone, risk appetite immediately returned to the markets, and investors again were on the lookout for high-yield assets, which are not to be found in the euro at the moment. The result is that there were substantial stock market rises, and renewed demand for the US dollar. According to the US Federal Reserve chair Janet Yellen, according to the declaration by its on Friday, expected to raise its interest rate this year.

FXCM Israel says that the shekel/dollar rate continues to make little progress in the NIS 3.75-3.8 range, but it could be that we are now seeing momentum in the dollar on world markets once more, and then speculators in the local market will push the pair upwards over the technical threshold of NIS 3.8/$.

FXCM says that the market responded in a positive way to the announcement of the agreement, but it does not look as though it believes that this agreement represents a long-term solution to the problem of Greece’s debt, and that’s why a strengthening of the euro wasn’t in the cards.

FXCM concluded by saying that the most important message to the market that could be understood from the agreement is that Europe still isn’t prepared to endanger the currency block as well as the European Union.