“There’s a sense that the market is holding its breath in anticipation of Trump’s Iran decision later today, with him giving the usual reality show treatment to the announcement,” says John J Hardy, Saxo’s Head of Forex Strategy. Ahead of the decision (possibly to be made public via Twitter), “the dollar and the yen are holding their recent strength in what has been a considerable eurodollar sell-off,” he adds.

The decision can be one of several that have been mooted and, says Peter Garnry, Saxo’s Head of Equity Strategy, “watch the energy sector in equities as there’s a possibility for a breakout to either side on the decision”.

But it’s the crude oil market that will likely show the most dramatic reaction to Trump’s Iran move. “The market has been left guessing and there are several options on the table because a withdrawal isn’t supported by the other five countries,” says Ole Hansen, Saxo's Head of Equity Strategy.  The likeliest of these are, Hansen says:

1. Takes action to fully re-impose/enforce US sanctions 
2. Watered down sanctions allowing “friends” to continue to trade 
3. Postponing the decision again while working with Europe to get a better deal

“Options two and three could trigger an initial sharp reduction of the non-fundamental price premium before current supply disruptions from Angola and Venezuela come in with support,” Hansen says. Another important factor to bear in mind is that “Trump sees the November mid-term election as a battle for his survival”. Any sharp spike in gasoline prices (already +20% yoy) may receive more attention than him acting tough against Iran.

 

Access both platforms from your single Saxo account.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)