Dollar strengthens slightly
TASE trading closes with negative trends
Finotec Trading analyst Yossi Re'em Amon discusses past week in finance. USD exchange rate closes at NIS 4.283 this week
The TA-25 index dropped 0.5 percent to 889, the TA-100 fell 0.8 percent to 904, and TelTech 15 index of top technology stocks slumped by 2.7 percent to 373.
The US dollar strengthened slightly this week and the representative exchange rate closed at NIS 4.283 on Thursday.
Yossi Re'em Amon, currencies analyst in Finotec Trading explained: "On Thursday the Dollar continued to lose ground as in the past seven trading days as any hopes of a widening in differentials between US interest rates and other G7 nation rates disappeared with the Fed's decision to keep rates on hold for another month”.
“The U.S. Commerce Department said on Friday that U.S. economic growth in the third quarter slowed to 1.6 percent, its weakest pace in over three years. Added to that the Dollar slipped to one-month troughs against the Yen and the Euro on Wednesday after the Institute for Supply Management's index showed factory growth slowed to a three-year low in October”, said Re'em Amon.
“The data strengthened expectations that the Fed would not raise interest rates again and stirred some speculation that they might even cut rates in early 2007 to boost growth”.
“The market atmosphere now is that the next change in US rates, whenever it comes, will be downwards. US rates are still higher than most (Yen 0.25%, Euro 3.25%, Pound 4.75%) and thus remain attractive, as the recent dollar retreat is really a release of strength built up in anticipation of rates increase.
Investors initiating short dollar positions must be extra cautious these days as there is still a meaningful and significant interest rate differential between the major currencies- particularly to the Yen. The Yen has come under a sustained beating from Japanese looking for higher returns offshore and from carry trades, in which investors borrow the low-yielding Yen to fund investments in higher yielding assets”.
“Looking a head for the weekend and next week the market is looking very closely to the US Non farm Employment Change that should come out as anticipated by the market at some 125,000 new jobs as opposed to last months 51,000.”
