The US dollar moved higher overnight after Donald Trump confirmed that he would renege on the multilateral treaty limiting Iran's nuclear production. It was not an instant reaction though: there was much confusion before and after the announcement.
There had been a general expectation that Trump would walk away from the deal, reimposing sanctions on Iranian oil exports. Even so, the price of oil dipped ahead of the announcement, rising only after the president had said his piece. Likewise, the safe-haven Japanese yen and Swiss franc strengthened ahead of the announcement and immediately afterwards before falling quite sharply a few hours later.
Investors are unsure what to make of it all. Taken at face value, if the treaty's other signatories plough ahead with it anyway it could mean American sanctions on European and Japanese goods, exacerbating already strained trade tensions between the States and the rest of the world. Alternatively, it could all be another elaborate bluster, threatening Armageddon in order to squeeze a few concessions.
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