“The chance of a V-type economic recovery in Europe increases” – the capital market

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“The forces that supported the strengthening of the shekel have diminished and the strength that characterized the shekel against the currency basket in recent years is being undermined,” said Kobi Levy, head of market strategy at Leumi Capital Markets, which responds to the agreement reached last night in Europe and the currency market.

At the beginning of Levy’s review of European reports “Good news yesterday supported the continued positive trend in the markets, among other things, positive results for the Corona vaccine and the approval of the rescue program in Europe. The big keepers. ”

On the weakness in the strength of the shekel, Levy says, “Anyone looking for the weakness of the shekel in recent times can easily find it comparing its value against the euro before the crisis when it traded at 3.7, compared to 3.9 today. Even against the dollar, the shekel is performing less well than before. Although the shekel returned to its value against the dollar before the crisis around 3.4, it is important to remember the reason for this – before the crisis the interest rate in dollars was almost 2% higher than the interest rate in shekels, the reduction in interest rates in dollars was supposed to weaken it more against the shekel. “The strengthening of the shekel has diminished and the strength that has characterized the shekel against the basket of currencies in recent years is deteriorating. Nevertheless, it is possible that the shekel will strengthen against one currency or another, such as the dollar, depending on point events.”

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Europe is on track
Levy shows great optimism following the agreement unveiled at the opening of the trading week “The big news of recent times comes from Europe. As part of a four-day summit, European countries agreed on a bailout package to deal with the corona crisis. The main beneficiary of the IPO will probably be Italy, and in addition, as a result of the move, the bonds of the weak countries may be in demand at the expense of the bonds of the strong countries. This is a high fundraising amount, approval of the plan and compromise reached with the four countries oppose the joint issue and its terms open the door to a wider debt consolidation in Europe in the long run.As a result, in our estimation, The first of the year, in Europe. This is in contrast to the situation in the United States and Israel.

“On a broader view, Europe is doing well in a crisis, both in terms of controlling the rate of infection and avoiding a second wave so far, and in terms of employment support. The current issue will support increasing solidarity between European countries and reducing economic disparities. “Similar to the situation after the great financial crisis of 1929, and the world war that created the European Union after it, it is possible that the war against the invisible enemy today will lay the foundations for Europe’s exit from the economic stagnation that has characterized it over the past decade.” Levy concludes.

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