Ukraine’s President Zelenskiy pushes for real peace, signals US support on security guarantees

Key quotes

Ukraine needs not a pause in war but real peace.
Discussed security guarantees with Trump and European leaders.
Received an important signal from the US on being part of the guarantees and helping to coordinate them.
The US offered to hold a trilateral meeting as soon as possible.
Ukraine is ready for any format to meet with Putin.
The Washington talks as “good, normal.”
Russia first offered a bilateral meeting with Ukraine, followed by a trilateral one.
Ukraine and Russia should meet without any conditions.
Had a long discussion with Trump about territories.
Details of the security guarantees will be worked out within 10 days.
Confirmed an agreement with the US for drone purchases.
Ukraine has offered to buy about $90 billion worth of US weapons.

Market reaction

At the time of writing, the WTI price is trading 0.04% higher on the day to trade at $62.60, while the Gold price (XAU/USD) is trading 0.04% lower on the day to trade at $3,330.

Risk sentiment FAQs

What do the terms"risk-on" and "risk-off" mean when referring to sentiment in financial markets?

In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ 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.

What are the key assets to track to understand risk sentiment dynamics?

Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – 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 “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.

Which currencies strengthen when sentiment is "risk-on"?

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 “risk-on”. 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.

Which currencies strengthen when sentiment is "risk-off"?

The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s 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 – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.