Institution: Risk Assets Strengthen on Hopes of US-Iran Thaw, Oil as Key Swing Factor
On May 25, OCBC Bank stated in a report that the market may be reluctant to aggressively eliminate geopolitical premiums, especially with liquidity thinning during the holiday period. The bank noted that, buoyed by hopes of a thaw in US-Iran relations, risk asset alternatives are expected to strengthen at the start of this week. However, the foreign exchange market may hesitate to chase gains due to the unclear details surrounding Iran's nuclear program and uranium enrichment. High-beta currencies such as the Australian dollar, South Korean won, and New Taiwan dollar may rise, while the Indian rupee, Indonesian rupiah, and Philippine peso may lag behind. Nevertheless, oil remains a key swing factor, as confirmed agreements and weak oil prices could drag down yields and the dollar.
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