After COVID and the Russia-Ukraine war, equity markets have been conditioned to price in recovery and move on from geopolitical or health crises much faster than fixed-income or commodity markets, which tend to dwell on the negative impacts for longer.
The Swiss National Bank (SNB) actively intervened to support the franc during the conflict. If the conflict de-escalates, the SNB is likely to halt this intervention. The removal of this support could prevent the franc from weakening as much as traders expect, creating an asymmetric risk profile for Euro-Swiss pairs.
China gained a "geopolitical halo" by facilitating the ceasefire, which could attract foreign capital back to its markets. Furthermore, the CNY's stability during the crisis may encourage Chinese exporters to sell their large dollar holdings, providing another source of strength for the currency.
During the active conflict, UK Prime Minister Starmer benefited from a "political continuity" effect, making a leadership challenge less likely. A ceasefire removes this shield, re-opening the door for internal party challenges and causing Sterling to potentially lag other high-beta currencies in a relief rally.
Despite short-term gains, the conflict has weakened the dollar's medium-term outlook by re-igniting US fiscal concerns, raising the risk of Gulf countries repatriating assets, and incentivizing investors to increase their FX hedge ratios on US equity portfolios due to the dollar's underwhelming safe-haven performance.