Hello traders, welcome to a new week. Right from the start, it’s clear that this Monday is shaping up to be eventful, with the Asian session opening the week with elevated volatility. The most striking move is in metals, which are climbing sharply and starting the week with a strong upswing. This price action represents a continuation of the dominant long-term trend, with buyers once again firmly in control.
On the opposite side of the spectrum, equity indices are under pressure. Index futures are opening the week with a sizable drop, signaling a clear shift toward negative sentiment after what had been a relatively successful previous week. This divergence between metals and equities is a classic reflection of a risk-off environment.
In the currency market, we are seeing some less common relative moves. The Australian dollar is weakening, while the New Zealand dollar is showing strength, a combination that does not occur very often. At the same time, the US dollar is under pressure, while the Swiss franc is strengthening, reinforcing the broader defensive tone across markets. These are the most notable FX developments at the start of the week.
Looking at today’s calendar, it is relatively busy for a Monday. Canada will release inflation data, which is somewhat unusual for the start of the week and could bring volatility to the Canadian dollar. The US stock market will be closed in observance of Martin Luther King Day, although futures markets will continue to trade as usual, meaning price discovery will still take place, albeit with thinner liquidity.
From a fundamental perspective, the key driver behind both the weakness in risk assets and the strength in metals is geopolitical tension. Markets are reacting to escalating friction within NATO, particularly between the US and the European Union. Reports of tariff threats linked to Greenland from Donald Trump, combined with the European Union calling an emergency summit, have raised concerns that relations between the EU and the US are entering a dangerous downward spiral.
This backdrop explains the current risk-off positioning, with equities struggling and safe-haven assets gaining traction. That is the market setup at the open of the new week, and the key question now is whether this defensive sentiment will persist through the coming sessions or fade as liquidity returns and headlines stabilize.