“Given the fear that the recent gains are likely to slow or even undergo a technical correction, we advise the adoption of securities, or the sale of call options against the purchase of a base asset, despite the continuing positive trend on markets” writes Union Bank of Israel (TASE: UNON) Bank in its weekly review.
Union Bank says that it is recommending this course of action, in light of the rise in oil prices over recent days, which is likely to affect inflationary pressures and bring about a change in trend on the market.
The Tel Aviv 25 Index will have technical support this week at 898.98 points.
As for inflation, Union Bank expects the Consumer Price Index (CPI) to fall by 0.1% in November, and then rise by 0.1% in December. The CPI for January will remain flat.
As regards the foreign currency market, Union Bank believes that although the Bank of Israel gave no indication that a further interest rate cut was in the offing, Governor of the Bank of Israel Prof. Stanley Fischer will probably make a further cut of at least 0.25% next month, in view of the dollar current weakness worldwide, a development that would account for its failure to regain ground against the shekel following the previous cuts.
Union Bank expects the shekel-dollar exchange rate to reach NIS 4.21-4.30/$ this week. The shekel has support at NIS 4.238/$ while the closest resistance level is NIS 4.331/$.
Published by Globes [online], Israel business news - www.globes.co.il - on December 3, 2006
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