The United Kingdom (UK) plans to send minesweeping drones to the Strait of Hormuz in an attempt to allow the flow of oil exports to resume, the Guardian reported on Sunday. However, officials said that sending ships,\u00a0as requested\u00a0over the weekend by the US President Donald Trump could escalate the crisis.<\/p>\n
In the world of financial jargon the two widely used terms \u201crisk-on\u201d and \u201crisk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a \u201crisk-on\u201d market, investors are optimistic about the future and more willing to buy risky assets. In a \u201crisk-off\u201d market investors start to \u2018play it safe\u2019 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.<\/p>\n<\/section>\n Typically, during periods of \u201crisk-on\u201d, stock markets will rise, most commodities \u2013 except Gold \u2013 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 \u201crisk-off\u201d market, Bonds go up \u2013 especially major government Bonds \u2013 Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit. <\/p>\n<\/section>\n 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 \u201crisk-on\u201d. 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.<\/p>\n<\/section>\n The major currencies that tend to rise during periods of \u201crisk-off\u201d are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world\u2019s 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 \u2013 even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.<\/p>\n<\/section><\/div>\n<\/p><\/div>",
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