Trump reverses market sentiment as global markets react to shifting expectations around US monetary policy and geopolitical developments. The USD shows mixed momentum while oil prices remain elevated and gold corrects, all driven by inflation concerns and evolving US-Iran negotiations. Meanwhile, equities respond positively to signs of easing tensions, highlighting how sensitive investor sentiment remains to both central bank signals and political headlines.
USD on the rise
The USD was on the rise on Friday and during today’s Asian session. The ongoing war in Iran maintains energy costs high, which in turn enhances market expectations for higher inflationary pressures in the US economy. Thus market expectations for the Fed are turning increasingly hawkish and currently there seems to be a 50-50 split in the market on whether the bank will hike rates or remain on hold near the end of the year. Yet the recent positive developments with US-Iranian negotiations beginning allowed for the USD to weaken in the early American session today.
Xcellence Research Team opinion
Should we see the market’s hawkish expectations for the Fed intensifying further, we may see the USD getting more support on the FX market. On the flip side a possible cancellation or substantial easing of the market’s worries for the war in Iran could weigh on the USD.
Oil prices also rise
The war in Iran escalated further over the weekend yet US President Trump took the markets by surprise once again in the late European session today as he postponed any attacks on Iranian after negotiations with Tehran. The news highlighted indirectly diplomatic communications between the US and Iran, which could lead to a “complete and total resolution of our hostilities in the Middle East”. Negotiations are expected τo be ongoing in the coming days.
Xlence Research Team opinion
Should the war in Iran de-escalating further, we may see oil prices losing further ground, while should we see the war in Iran intensifying, possibly threatening possibly even more intensely the supply chains of the international oil market, we may see oil prices rising again.
Gold’s price correcting
Gold’s price was on the retreat in today’s Asian and European sessions. Enhanced market expectations for the Fed to keep rates high for longer tended to weigh on gold’s price. It should be noted that gold’s price experienced the worst week in decades and yet had continued to move decisively lower. Yet the US President Trump’s post on Truth Social, about US-Iranian negotiations allowed gold’s price to correct higher as market expectations for high inflationary pressures could be mitigated.
Xlence Research Team opinion
Should we see market worries for the war in Iran easing further, thus expecting oil prices to continue to drop, we may see gold’s price getting some support as market worries for a possible tightening of the Fed’s monetary policy may ease.
US stock markets jump on Trump’s comments
Despite US equities being on the retreat in today’s opening given the market’s hawkish expectations for the Fed’s intentions. Yet President Trump’s post on Truth social about productive negotiations with Iran, caused US equities to jump as the risk off market sentiment tended to ease. One must note that it’s the first glimpse of a possible resolution being on the horizon and one could characterise it as a turning point.
Xlence Research Team opinion
Should we see the market sentiment being allowed to improve further, we may see US equities getting some support. On the flip side, should any negotiations fall through we may see US equities diving lower once again.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
