Safe Havens Dominate as Political Risk Resurfaces

We are starting the last full trading week of January, and the Asian session opened in a very interesting and clearly directional way. Several strong moves are already visible across asset classes. Before looking at pure price action, let’s start with the fundamentals, where new political tensions are setting the tone.

A fresh dispute has emerged between the US and Canada. Donald Trump criticized the possibility of a China–Canada trade deal and threatened to impose 100% tariffs on Canada if such an agreement were to be signed. In response, Canadian Prime Minister Mark Carney stated on Sunday that Canada has no intention of pursuing a free trade agreement with China. This exchange has added another layer of uncertainty to global trade relations and is weighing on overall market sentiment.

At the same time, developments in Japan are playing a key role in the currency market. Japan’s Prime Minister Sanae Takaichi signaled readiness to counter speculative market activity, warning that authorities stand ready to act if volatility intensifies. The Japanese yen strengthened sharply on Friday following these comments and is continuing its advance on Monday. This behavior raises the possibility that we are seeing the early stages of a broader correction, or potentially even a trend change, in yen-related pairs.

Looking at today’s macro calendar, it is relatively light. We are expecting Germany’s Ifo business climate data and US durable goods orders. These releases are unlikely to dominate sentiment on their own, especially given the current political and risk-driven backdrop.

Turning to indices, futures are opening the week on the red side of the market. The declines are modest for now, but they confirm a defensive tone at the start of the final full week of January.

Currency markets reflect this risk-off environment clearly. The Japanese yen is the strongest performer. Antipodean currencies are under pressure, while both the US dollar and the Canadian dollar are weakening. In Europe, the euro and the British pound are moving lower, while defensive and regional currencies such as the Swiss franc, Hungarian forint, Norwegian krone, and Swedish krona are pushing higher.

The biggest story of the session is unfolding in commodities. Gold opened the week by printing new all-time highs and is up roughly 2.5% on Monday alone. Silver is even stronger, gaining around 6% in a single session. This confirms a continuation of the powerful bullish trend in precious metals, with silver now trading decisively above the 100-dollar psychological barrier, a level that until recently was widely considered unreachable.

Finally, cryptocurrencies remain under pressure. Bitcoin is trading lower and continues to develop a new short- to mid-term bearish trend, with the latest bearish wave starting on January 23. That said, as we approach the European session, Bitcoin is attempting to stabilize and partially reverse the negative opening seen at the start of Monday trading. Whether this develops into a broader recovery or remains a corrective bounce will depend on follow-through later in the session.

Source: https://www.axiory.com/analytics/market-news/safe-havens-dominate-as-political-risk-resurfaces