By Daniel Engelsman The first week of 2012 has shown us what we may expect throughout the forthcoming year.
At the start of the week we saw huge Shekel weakness, and ended the week with the Shekel clawing back some of its losses.
The US Dollar over the last couple of months has shown great improvement, which is down to two factors. Firstly, improving economic data the highlight of which was released on Friday showing that unemployment decreased to 8.50% – a three year low. As a result, we have seen the US Dollar at one point hit 17 month highs against the Shekel at 3.85. Secondly, the problems with the Euro has meant investors have taken funds out of Euros and put them in to Dollars which has helped strengthen the Dollar.
Sterling went above the psychological level of 6.00 during the week but has since fallen back to 5.92. Whenever a currency wants to break a psychological level like this it finds it very tough. On three previous occasions when Sterling has tried to get through 6.00, it has hit that level and then fallen straight back. This time it went as high as 6.02 but struggled to stay above 6.00.
The Euro has continued its struggles, despite briefly revisiting a rate of 5.00 against the Shekel. Investors are concerned about the euro zone sovereign funding pressures and have fled the Euro and put their money in to Sterling or Dollars.
The Australian Dollar hit the highest rate ever against the Shekel at 3.98. With interest rates in Israel on the decline, and interest rates in Australia remaining high it creates a greater attraction for the Australian Dollar. Don’t be surprised to see the rate go through 4.00 at some point. However, just like Sterling this may prove to be a very psychological level to break through and remain.
The Canadian Dollar also joined the party showing great improvement against the Shekel. At one point last week we saw the rate go above 3.80, for the first time since January 2008! The rate has since decreased to the low 3.70’s, which should still be considered a very good rate.
The highlights of economic data to be released this week are:
The Bank of England and European Central bank interest rate decisions and inflation figures from Germany.
Lets see if any more record-breaking rates will be achieved this week!
Have a good week
Daniel Engelsman
Head of Trading,
IsraTransfer Ltd
