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Middle East war outlook set to drive a risk-on or risk-off shift

Reported · Written up by our desk · Major Pairs

According to FXStreet, market participants often describe conditions in terms of “risk-on” or “risk-off,” depending on how much uncertainty investors are willing to accept.

In a risk-on environment, investors are more willing to buy risky assets, with expectations that equities rise and many commodities gain, while in risk-off periods investors favor safety, with major government bonds, gold, and safe-haven currencies like the Japanese yen, Swiss franc, and US dollar benefiting.

FXStreet also notes that in risk-on periods, currencies of commodity-exporting nations can strengthen, and cryptocurrencies tend to rise, while in risk-off markets the focus shifts toward less risky assets.

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