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HiFX Morning Update – Trump’s Iran move

The NZDUSD opens at 0.6968 (mid-rate) this morning.

This morning President Trump announced the US will withdraw from the Iran nuclear deal forged under the Obama administration and reinstate sanctions on Tehran which were suspended under the 2015 accord.

We will be instituting the highest level of economic sanction," Trump said. "Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States."

Crude oil prices which plummeted ahead of the announcement took commodity-linked currencies including the NZD, AUD and CAD with it. WTI prices which were down 3% ahead of the announcement are bouncing back as I type, currently down 1.2%.

The USD had earlier received a boost as investors interrupted Fed Chairman Jerome Powell’s speech on monetary policy as dollar positive. Mr Powell said “Fed policy normalization has proceeded without disruption to financial markets, and market participants’ expectations for policy seem reasonably well aligned with policymakers’ expectations.” The market is currently expecting two further rate hikes in 2018 followed by another three hikes in 2019.

The threat of a snap election in Italy after coalition talks between the anti-establishment 5-Star-Movement and the anti-immigrant and anti-European Union League broke down has seen the EUR decline against all its rivals.

Global equity markets are mixed- Dow +0.10%, S&P 500 -025%, FTSE -0.02%, DAX -0.28%, CAC -0.17%, Nikkei +0.18%, Shanghai +0.79%.

Gold prices are trading back at $1,314 after rising to $1317 as the market awaited Trump's speech. WTI Crude Oil prices which were down 3% ahead of Trump’s speech are bouncing back currently trading at $69.75 a barrel.

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