Forex Today: Trump Pauses Project Freedom, Risk Assets Advance

President Trump announces a pause in the operation to reopen the Strait of Hormuz to give a peace agreement a change.

1. The major news item moving the market today is President Trump's announcement that that the US operation which had begun to escort ships through the Strait of Hormuz has been suspended for a short while to allow a chance for a peace agreement between the USA and Iran to be concluded. This immediately saw stocks and other risky assets move higher, while safe havens and energies, and also some soft commodities such as Wheat, decline. The prediction site Polymarket now sees only a 39% chance of a peace deal by the end of June, but a 70% chance of one by the end of 2026. President Trump did clarify that the naval blockade of Iran remains in force.
2. It is interesting that this pause comes after escalation back towards open warfare seemed to be on the table, with the US and Iran exchanging fire at sea and with Iran bombing the U.A.E. for two consecutive days. My take: Trump, of all people, has become like an American tourist getting ripped off in a bazaar. The Islamic Republic are seemingly succeeding in leading Trump on a dance, probably with conditional promises to hand over enriched uranium and pleas of internal dispute. The regime will never give up that enriched uranium - it will have to be taken by force. Trump will either walk away and leave the issue unresolved or the war will escalate. It is hard to see Trump giving up but the Iranians will try to run out the clock until Trump becomes so politically hamstrung that the war ends inconclusively. That said, the uranium can only be properly dealt with by a ground operation.
3. Market reaction can be seen in several key assets:
   1. Stock markets moved higher, notably in the USA and South Korea where the NASDAQ 100 Index, the S&P 500 Index, and the KOSPI all rose strongly to new record highs.
   2. Crude Oil and Gasoline dropped, especially Brent Crude.
   3. Gold and Silver rose quite strongly.
   4. The Australian Dollar gained strongly.
   5. Most soft commodities are trading lower, as they have also been affected by transit issues linked to the Strait of Hormuz issue.
4. Bitcoin is benefiting from the risk-on environment, with the price trading near yesterday's high price just above $81,000 . Some traders will be long here. I prefer to wait for 6-month highs, which in the case of Bitcoin right now is a lever just below $100,000 which is still quite far away. Technically, the price moved lower quickly when it was previously trading in this area, and that does encourage a view that it could now rise quickly too in the same area.
5. In the Forex market, the strongest major currencies since the Tokyo open were the New Zealand and Australian Dollars, while the Swiss Franc has been the weakest. There will be focus today on the AUD/USD currency pair, which has risen strongly to reach a new 3-year high price.
6. There were releases yesterday of potentially high impact data concerning the USA and New Zealand:
   1. US ISM Services PMI - almost exactly as expected.
   2. US JOLTS Job Openings - almost exactly as expected.
   3. New Zealand Unemployment Rate & Employment Change - this unexpectedly fell from 5.4% to 5.3%.