US President Trump: War will end in two or three weeks
In a telephonic interview with NBC News late Tuesday, US President Donald Trump said that he believes the war on Iran is “coming to an end”.
When asked what he was going to bring oil prices back down, “all I have to do is leave Iran – and we’ll be doing that very soon. Then prices will “come tumbling down.”
He further spoke on keeping the strait of Hormuz open - “That’s not for us. That’ll be for France. That’ll be for whoever’s using the strait.”
Additional quotes
We’re doing great. And it’s coming to an end.
The people we’re dealing with [in Iran] are much more reasonable and not as radicalised.
We will not have an Iran with nuclear weapons … I have to go, I have a war to prosecute.
Now we’re finishing the job.
I think in two weeks or maybe a few days longer, we’ll do the job. We want to knock out everything they’ve got.
Market reaction
The US Dollar Index (DXY) is licking its wounds near 99.80, down 0.10% on the day, as of writing, amid a return of risk appetite.
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
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
