A Wall Street Journal article reported that the Pentagon is preparing a second aircraft carrier to deploy to the Middle East.
Middle East tensions flare after reports of potential US carrier deployment and renewed nuclear deal warnings
On Tuesday, US President Donald Trump said that he was weighing sending a second carrier to the Middle East, as a measure to exert pressure on Tehran over nuclear talks.
According to sources cited in the article, an official said the order could be issued within hours.
“The officials cautioned that Trump hadn’t yet given an official order to deploy the second carrier, and that plans could change. The carrier would join aircraft carrier USS Abraham Lincoln that is already in the region,” says the report.
Donald Trump signals tougher stance on Tehran
Recently, US President Donald Trump revealed on his Truth Social account that he met with Israel’s Prime Minister Benjamin Netanyahu. Trump said the meeting was good, and that nothing definitive was reached other than he insisted that “negotiations with Iran continue to see where or not a deal can be consummated.”
Trump escalated threats on Iran, saying that the “Last time Iran decided that they were better off not making a Deal, and they were hit with Midnight Hammer — That did not work well for them. Hopefully this time they will be more reasonable and responsible.”
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Source: https://www.fxstreet.com/news/pentagon-weighs-second-carrier-as-trump-ramps-up-iran-pressure-wsj-202602112000
