Iran’s Foreign Minister Araghchi warns against US threats
Iran’s Foreign Minister Abbas Araghchi has warned through a post on X, formerly known as Twitter, that the deal with United States (US) could be hampered if the nation continues with its threats. “Negotiations on a final deal will not commence if threats continue. Honour your signature,” Araghchi wrote.
The message from Iran seems a furious answer to US President Donald Trump’s statement on Monday, in which he said that either Washington will make a deal with Iran or it will attack its infrastructure.
“We're either going to make a deal or we're going to finish the job. OK. And it won't be tough to finish the job. I'd rather make a deal, because I don't want to affect 91 million people," Trump told reporters in the Oval Office, Reuters reported. "We can knock down their bridges in one hour, we can knock out their energy supply. They don't have any money now. We haven't given them any money," Trump added.
Market reaction
The US Dollar (USD) appears to remain neutral after comments from Iran’s Foreign Minister Araghchi against US President Trump's military threats. At press time, the US Dollar Index (DXY) trades 0.1% higher at around 100.90.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
