Israel’s Official War Goal: Halting Hezbollah Attacks
Israel has declared that stopping Hezbollah’s attacks in the country’s north to allow residents to return to their homes is now an official war goal. This decision comes as Israel contemplates a broader military operation in Lebanon that could potentially escalate into a full-scale conflict, as reported by the AP News.
Background
Since the outbreak of the nearly yearlong Israel-Hamas war in Gaza, Israel has faced near-daily strikes from Hezbollah. In response, Israel has conducted numerous airstrikes in Lebanon, targeting and eliminating prominent Hezbollah leaders.
Market Reaction
As of the latest update, the price of Gold has increased by 0.19% to $2,575.
Risk Sentiment FAQs
Understanding Risk Sentiment in Financial Markets
What is “Risk-On” and “Risk-Off”?
In financial terms, “risk-on” and “risk-off” indicate the level of risk that investors are willing to take during a specific period. In a “risk-on” market, investors are optimistic about the future and more inclined to invest in riskier assets. Conversely, in a “risk-off” market, investors become more cautious and prefer safer investments.
Impact on Markets
During a “risk-on” period, stock markets and most commodities (excluding Gold) tend to rise as investors anticipate growth. Currencies of commodity-exporting nations strengthen, and cryptocurrencies experience gains. In contrast, a “risk-off” market sees bonds, Gold, and safe-haven currencies like the Japanese Yen, Swiss Franc, and US Dollar perform well.
Role of Commodity Currencies
Currencies like the Australian Dollar, Canadian Dollar, and New Zealand Dollar typically rise in “risk-on” markets due to their heavy reliance on commodity exports. Other minor currencies, such as the Ruble and South African Rand, also benefit from increased demand for raw materials during periods of economic growth.
Major Currencies in “Risk-Off” Environments
During “risk-off” phases, the US Dollar, Japanese Yen, and Swiss Franc tend to strengthen. The US Dollar benefits from its status as a global reserve currency, while the Yen and Franc gain support due to demand for their respective government bonds and strict banking regulations.