Market confidence surged following the agreement of a two-week ceasefire, which included the opening of the Straits of Hormuz. Oil prices collapsed nearly US$20pb, while equities surged and bond yields tumbled. Market sentiment exploded, on the announcement and now intense negotiations are underway, to find a permanent solution. A long-term agreement will see markets brush off the current, temporary inflation crises and treat the last 5 weeks, as a momentary lapse in reason. This is only the first step in a very volatile process, that could reignite at any time. The flight to the safety of the US Dollar was undone, with the EUR surging towards 1.1700, while the GBP blew through 1.3400.The unwinding in the reserve allowed commodity currencies to regain lost ground, with the AUD breaking back towards 0.7050, while the NZD headed towards 0.5850. The RBNZ left rates unchanged, as expected, but warned of action if the recent inflation crises continued. All eyes remain on the tensions and the military kinetics in the Middle East.
