President Trump's announcement that a deal with Iran has been verbally agreed as a framework for a peace deal has sent risky assets higher and crude oil lower.
- The major news and market driver as the new week gets underway is President Trump's weekend announcement that the framework for a peace deal has been verbally agreed with Iran. Although nothing has been formally signed yet, it is widely believed that a Memorandum of Understanding will shortly be formalised between the USA and Iran which will reopen the Strait of Hormuz. The other details are unclear, but President Trump is stating that the agreement will provide for the handover of Iran's enriched uranium and the end of Iran's nuclear weapons program. However, nothing has been agreed, and details remain fluid and hard to pin down. It is important to remember that this deal could still collapse.
- U.S. equity index futures have gapped higher in off‑hours trading on optimism over the potential deal, with the S&P 500 Index holding an implied price well above the key 7,500 level and the NASDAQ 100 Index not far off the 30,000 milestone. The Japanese Nikkei 225 Index has soared to a new record high above 65,000, rising by more than 3% on the day - the Japanese economy is heavily affected by whether the Strait of Hormuz is open or not. "Risk" assets are generally higher on the news. Trend traders will want to be long here.
- Crude Oil and Yields are firmly lower on the news, triggered by the hope that the Strait of Hormuz will soon reopen, and that the inflationary oil shock will start to dissipate. WTI is trading down by over 6%.
- In the Forex market, the US Dollar Index has gapped a bit lower, and has been the weakest of all major currencies since today's Tokyo open. The British Pound has been the strongest major currency, putting the GBP/USD currency pair in focus, although it has not yet overcome the big round number at $1.3500. The Australian Dollar is also strong on improved risk sentiment.
- Bitcoin is rising for the third consecutive day after finding support above $75,000 as it starts to make a more decisive bullish turn.
- It is a public holiday today in the USA, Germany, the UK, France, and Switzerland.