Russian leader Vladimir Putin stated that US President Donald Trump is making efforts to resolve the Ukraine conflict. Putin showed openness to talks and compromises on Ukraine, indicating the West and Ukraine now bear responsibility. The gold market was stable, with prices around $4,327. In financial markets, “risk-on” and “risk-off” refer to how much risk investors are willing to take. In “risk-on” times, stock markets and commodities tend to rise, while in “risk-off” periods, bonds and some currencies strengthen.

Key Assets Indicating Investor Sentiment

Key assets like stock markets, commodities, and currencies reflect investor sentiment. During “risk-on” times, stock markets and cryptocurrencies often go up. In contrast, Gold and safe-haven currencies like the Japanese Yen and Swiss Franc generally increase during “risk-off” periods. The Australian Dollar and Canadian Dollar usually strengthen in “risk-on” markets because of their focus on commodity exports. On the other hand, the US Dollar, Japanese Yen, and Swiss Franc tend to rise in “risk-off” times due to their safety and economic stability. Putin’s recent remarks on peace talks could signal a big change in market sentiment. Although the initial response has been cautious, the chance for de-escalation in the Ukraine conflict is significant. The market’s hesitance makes sense, as past peace efforts have often failed since the war began in 2022. If the talks progress in the coming weeks, we could enter a classic “risk-on” situation. A real move towards peace would likely lead to a strong outflow of capital from safe-haven assets. Derivative traders might want to prepare for a potential decline in the value of the US Dollar, Japanese Yen, and Gold.

Impact of Inflation Data and Energy Markets

This situation is further complicated by November 2025’s inflation data, which showed US CPI at 2.8%. While this is a positive sign, it leaves central banks cautious. A major easing of geopolitical tensions would significantly affect the inflation outlook, especially in Europe, making current central bank predictions less certain. We should closely watch European energy markets, especially natural gas futures. European gas prices, currently about €45 per megawatt-hour, could drop sharply with confirmed progress in peace talks. This would greatly benefit European industries and might make call options on indices like Germany’s DAX very appealing. For currency derivatives, the Euro is likely to gain the most if the conflict ends. With EUR/USD around 1.1700, a confirmed peace deal could push it past key resistance levels. Traders might consider call options on the Euro or put options on the US Dollar Index (DXY) to take advantage of this potential change. Historically, markets show volatility when peace talks begin, with sharp gains on good news and pullbacks on setbacks. We saw similar patterns during initial negotiations in spring 2022, which ultimately did not succeed. Thus, any bullish, risk-on positions should be managed with care, as the situation remains uncertain. Create your live VT Markets account and start trading now.

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