After a quiet start to the day markets have come to life with the Dollar surging against developed and emerging market currencies and crude oil prices falling by $2/barrel in the past few minutes. The Dollar trade-weighted-index has rallied 0.5% to a six month high as markets await US President Trump’s decision on whether the US will abandon the nuclear deal with Iran and reimpose sanctions.
President Trump has moved his announcement from Saturday’s deadline to today 19.00 (London time). There are conflicting reports as to whether he will renege on the deal and impose new sanctions on Iran despite opposition from the UK and France and the devil will likely be in the detail. White House officials have suggested that President Trump would stop short of a hard exit from the deal and instead reimpose sanctions on Iran’s oil exports and penalise foreign companies operating in Iran beyond an agreed deadline. But the sharp fall in the price of crude oil to below $74/barrel and sell-off in oil currencies, including the Canadian Dollar and Norwegian Krone, suggest that markets believe that a modest tweak to the deal is more likely.
