Once again, Donald Trump is stealing financial markets’ attention as he announced yesterday he will give his final decision on the Iranian nuclear deal today at 2pm ET (20pm CET). The FX market doesn’t know where to stand this morning as the greenback extended gains against commodity currencies such as the CAD, AUD and the NZD (-0.75%, -0.55% and -0.25%) , while safe-haven ones, such as the JPY and CHF (+0.10% and +0.01%), held ground. It is also important to note that the Aussie is suffering ahead of the release of the federal budget. Indeed, the government is expected to announce details of its much-awaited tax break.
Crude oil is also experiencing higher volatility. After hitting $70.84 on Monday evening, the price of WTI erased gains and slid back to $69.84, down 1.25% on the day. Similarly, the Brent fell 0.90%, down to $75.50 as investors brace for a stormy trading session.
Given the well-known unpredictability of the US President, it is difficult to make a prediction. Nevertheless, we think that the risk is mostly skew to the upside for the buck as there is a greater chance that he withdrawal from the nuclear agreement than he supports it. In addition, in the case he decides to extend the deadline for the decision, it would rather have a neutral impact on the current risk sentiment.
By Arnaud Masset
