Middle East War updates: Iran says Strait of Hormuz main focus of talks to end war with US

Iran has declared that the Strait of Hormuz is the primary subject of negotiations aimed at bringing an end to the ongoing war with the United States. The latest developments, which took place over the weekend, are anticipated to have a substantial influence on financial markets in the coming week. In the investment world, "risk-on" and "risk-off" are commonly used expressions that denote the degree of risk investors are prepared to take during a specific timeframe.

When markets are "risk-on," investors are optimistic about the future and more inclined to purchase risky assets. Conversely, when markets are "risk-off," investors become more cautious, opting for safer, more certain assets that offer modest returns. Under "risk-on" conditions, stock markets typically rise, and most commodities – excluding Gold – also appreciate in value due to a positive growth outlook.

The currencies of nations that are significant commodity exporters strengthen as demand increases, and cryptocurrencies also tend to rise. Conversely, in "risk-off" environments, bonds generally increase in value, especially major government bonds, while gold shines and safe-haven currencies such as the Japanese Yen, Swiss Franc, and US Dollar gain strength.

Currencies of commodity-dependent economies like the Australian Dollar, Canadian Dollar, New Zealand Dollar, and minor currencies such as the Ruble and South African Rand generally rise in "risk-on" markets due to the higher commodity prices. In "risk-off" markets, major currencies that tend to strengthen are the US Dollar, Japanese Yen, and Swiss Franc.