The IsraTransfer Report – June 2018
There was no shortage of interest in the currency markets last week, including the widening of rates between the US dollar and the shekel. Elsewhere, Bank of Israel announced that it’s getting set to take a hike of its own, and the fog grows thicker over the GBP.
Plus, the price is right for Israel’s first-time home buyers, and Lockheed Martin takes the Ministry of Education out to launch. Ready to catch up on the month in review? Then scroll down and let’s get to get to it.
From the IsraTransfer Currency Trading Desk
Interest rates were the hot topic last week in the currency markets, especially when it came to the USD/NIS exchange rate. Not only did the US Fed raise interest rates, but also shored up any remaining doubt that it would do so again this year. In fact, the chance of three additional rate hikes instead of two has now become a legitimate reality. While Bank of Israel has indicated that it will almost certainly raise rates itself, it almost certainly won’t happen until the end of the year. As such, the widening of the interest rates between the two currencies should only widen while we wait, and could even be something of a wet blanket on the rate that keeps it at its current level for the immediate future.
In sterling trading, the cloud of Brexit that has been hovering over the British currency is about to get even thicker, as the US announced that it will begin to impose steel tariffs on UK. The trading trend for the GBP/NIS has been one of a steady decline in the rate since making a high of 5.00 at the beginning of May, and we see nothing on the short-term horizon to potentially turn things around.
Going forward, in a week extremely light on economic data releases, we expect news to be the main driver of the markets. With the ongoing political instability in the region still on everyone’s radar, along with the US’ somewhat capricious approach to monetary policy, our expectation is for a stronger shekel over the next few weeks based primarily on its past performance, as well in keeping on with the currency’s overall trading momentum.
Stay on top of daily trading in the shekel, plus notable news, economic announcements and more with IsraTransfer’s free Daily Shekel Report newsletter.
Israel Economy Report
Apparently Israel’s impressive and sustained economic growth, along with a decline in unemployment, still wasn’t enough to earn a perfect score in the latest survey by the Organization for Economic Co-operation and Development, In the report the OECD strongly suggests that Israel’s investment in closing the social gap should be the government’s top priority in order to prolong the economy’s vibrant health. Among the items recommended for a capital infusion include education, transportation, as well vocational training and more in the hopes of helping those currently lacking in core skills to become more competitive and productive members of Israel’s workforce going forward.
Israel Real Estate
In an early sign that the housing market may be starting to turn the corner, good news was to be found in the Ministry of Finance’s first-quarter report. Data released Sunday by the ministry’s chief economist on residential real estate showed an uptick in first-time home purchases following three consecutive quarters of declines. Leading the way on the real estate spending spree were first-time buyers aggressive participation in the Machir L’Mishtaken (Buyer Fixed) program which enables first-time home buyers to purchase a home at below market prices.
An additional helping of optimism about the Israel real estate also made an appearance in the aforementioned OECD first quarter survey. The consensus surrounding the most recent housing data is that the market is in fact steady, especially when compared to the same period in 2017.
And in case you missed it….
Israel’s Baby Geniuses
Anyone who thinks teaching preschoolers isn’t rocket science better think again. Thanks to iconic US aerospace company, Lockheed Martin, the city of Jerusalem is set to play host to a new cutting edge preschool centered around science and technology. An extension of Lockheed’s existing MadaKids Science, Technology, Engineering, and Mathematics (STEM) school system, the learning institution will be situated in the Kiryat Menachem neighborhood, and will be run by a consortium that includes the Ministry of Education, Ministry of Science and Technology, Ministry of Jerusalem Affairs and Heritage, and the Jerusalem Municipality.
Experts have long been very vocal that the future health and prosperity of Israel’s economy will be heavily dependent on highly-trained and technology savvy individuals. Likewise, Lockheed hopes their investment in Israel’s young minds will reap benefits for it too, as the company looks to keep its pipeline of talent and innovation well stocked for years to come. The school is set to open in September 2018, with classes to be taught by teachers trained by the Rashi Foundation, a non-profit philanthropic organization. Not surprisingly, the curriculum will feature intense immersion in STEM subject matter, and Lockheed even plans to ultimately offer robotics courses for its kindergarten graduates.