Market Report

Dollar, Euro Take a Plunge as Shares Turn Higher

Greenback goes week under 3.50.

The dollar and the euro both weakened sharply against the shekel on Monday amid thin holiday week trading, as the Tel Aviv Stock Exchange’s TA-25 index eked out a gain for the day.

The U.S. currency sunk 0.4% to a Bank of Israel rate of 3.4780 shekels, marking a week of trading under the key psychological floor of 3.50. In late trading, the dollar had sunk further to 4.4712 shekels.

The euro, meanwhile, dropped a sharper 0.6% to 4.7880 and in late trading was 4.7920 shekels.

Currency trader FXCM said the foreign currency market would be volatile during the Christmas-New Year’s holiday week and that the dollar would probably strengthen in 2014, as the U.S. Federal Reserves winds down its bond-buying program.

Nevertheless, FXCM said criticism of the Bank of Israel’s failure to prevent the shekel from strengthening was growing.

“This is a key test for Governor Karnit Flug because the drop in the exchange is being seen as a personal failure on her part,” it said. “The range of 3.47-3.50 shekels now constitutes the support zone. But if the Bank of Israel doesn’t succeed in defending it, it is likely to fall below that, posing a significant danger to Israeli exports and the economy.”

In TASE trading, the benchmark TA-25 index was down in the first hours of trading, changing direction from 1 P.M. to close up 0.3% at 1,319.40 points. The broader TA-100 advanced 0.3% but failed to break the 1,200-barrier and finished at 1,198.57. Turnover was 1.34 billion shekels.

In the fixed-income market, the government’s 10-year inflation-indexed bond declined 0.3% to boost its yield to 1.53%. Its unlinked shekel bond for the same term edged down 0.05%, to raise the yield to 3.65%.

The Tel-Bond 30 index added 0.28%, the Tel-Bond 40 0.62% and the Tel-Bond 60 0.46%.

World stocks hovered near a six-year high on Monday, putting the finishing touches to a bumper year, as the euro strengthened against the dollar and yen on comments from European Central Bank chief Mario Draghi.

MSCI’s all-country world equity index edged up 0.06% to 407.06, its highest level since late 2007. It was poised to gain 9.8% for the year.

On Wall Street in late morning trading, the Dow Jones industrial average was up 0.03% at 16,483.58. The Standard & Poor’s 500 Index was off 0.1% at 1,839.43 and the Nasdaq Composite Index down by 0.2% at 4,146.93. The FTSEurofirst 300 index of top European shares ended its last full session of the year down 0.2 percent at 1,311.76 points.

On the TASE, the biopharmaceutical company Can-Fite plunged 18.2%. The company said Monday that its OphthaliX unit found after a 24-week Phase III clinical study that its CF101 drug for dry-eye syndrome did not achieve “efficacy endpoints.”

Discount Investment, a unit of the IDB group, lost 1.9% after a group of shareholders filed suit against its board on Sunday, alleging that some 1.28 billion shekels in dividends paid in 2010-2011 violated regulations.

Teva Pharmaceuticals posted only a mild rise of 0.1%, even though the French drug maker Sanofi’s Lemtrada multiple sclerosis treatment failed to win approval on Monday from U.S. regulators. Designed to treat relapsing remitting multiple sclerosis, the drug would have been a new rival for Teva’s Copaxone.

Among the top gainers in Monday’s session, Space Communication, operator of the Amos satellites, climbed 6.4% after it reported Monday that it had received “a number of attractive offers in principle” to buy all of its shares outstanding.

Apparel retailer Fox rose 6.2% by closing after it reported that the British private equity fund Apax was interested in buying the company.

Defense electronics maker Elbit Systems advanced 2.9% by close.

Reuters