Trump Speaks, Supporting Riskier Assets. Did Iran, China and Russia Listen?The bulls find support as President Trump reaches out to Iran… It now depends on how the Iranians respond. The diplomatic game of chess has begun…
The U.S President spoke on Wednesday, responding to the missile strike on U.S occupied bases in Iraq.
While the threat of further measures against Iran was laid out, an olive branch was also extended.
There may be some wishful thinking, however, for the U.S to expect both China and Russia to align with the request of the U.S to step back from the Iranian regime.
Both nations have a long-standing relationship with Iran and are unlikely to follow the requests of the U.S President.
Trump also called on NATO to take a greater interest and involvement, while also calling on the likes of Britain, Germany and others to support the U.S.
Few want to get embroiled in a military campaign in the Middle East that could deteriorate into a full-blown proxy war.
The markets reacted favorably to the Trump address. There will have been fears of severe measures in response to Wednesday’s attacks.
Olive branches abound and talk of a desire to reach an agreement with Iran to allow the nation to prosper was key.
We saw the Dow bounce by more than 120 points in response to Trump’s comments.
Commodity currencies also found support, with the Aussie Dollar reversing losses from earlier in the day.
For those looking at the cryptos, Bitcoin hit reverse in response to the speech. Bitcoin had surged to $8,400 levels this week as the threat of conflict in the Middle East peaked. Trump’s speech led to a sharp pullback to sub-$8,100 levels.
Interestingly, it was one of the few occasions in recent times that Bitcoin had become a safe haven. It was perhaps unsurprising when considering the possible ramifications of all-out war in the Middle East…
With the olive branch now extended, it now rests with Iran’s supreme leader to respond to Trump’s speech.
Iran has cranked up its uranium enrichment program and has promised severe retaliation to the U.S attack last Friday.
Wednesday’s missile attacks on selected bases will unlikely cut it for the Iranians and for the Revolutionary guard.
‘The face’ has been saved, however, and Trump’s olive branch could be considered a diplomatic victory for Khamenei.
One thing is certain, Iran will likely play along with the diplomatic goal of peace and prosperity. After all, the country has been under the cosh since the U.S reintroduced sanctions.
The population would be somewhat irked if the government failed to take advantage of what is currently on offer.
For the U.S, it could be game, set, and match. If Iran brushes aside the offering, uprisings within the country may well create social and economic unrest. It would even offer the U.S an opportunity to, once more, meddle in Iran’s future…
For all concerned, whatever the outcome, few would like either side to escalate beyond the events of the last week…