Friday's have been a day for geopolitical risks for the past month, starting with the terrorist attacks and continuing as markets awaited Israel's response. Going into this weekend, there is less scope for bids in gold/oil/CHF because the ground invasion has already started but eyes will be on a speech at 1300 GMT (9 am ET) when Hezbollah leader Hassan Nasrallah speaks.
Aside from some border skirmishes, Hezbollah hasn't entered the war and the fear is that he could announce a more active role, or at least hint at it.
Yesterday, CNN reported that Hezbollah and other Iran proxies weren't looking for a broader fight. Their strategy, it indicated was to draw some Israeli forces away from Gaza with border skirmishes but to avoid a larger fight that would potentially pull in the US.
However the siege in Gaza may be putting pressure on Hezbollah to do more and there are rumors they could declare war. To me, that doesn't make much sense. This isn't the 19th century, no one declares war anymore because it eliminates the element of surprise. If he were to do that, Israeli missiles would be launched almost immediately, likely starting with airports in Lebanon.
My guess is he leans heavily into civilian and ceasefire rhetoric in an effort to turn public sentiment against Israel; though I certainly don't think Hezbollah is going to sway anyone.
In any case, there will certainly be some inflammatory rhetoric and that should put markets on edge.
