Markets are reopening to fresh volatility, and we already have new developments in the ongoing trade wars. According to a statement from the Chinese Ministry of Commerce, China has warned it will retaliate against any country that cooperates with the United States in a manner that compromises Beijing's interests. This warning has added a fresh layer of uncertainty to the geopolitical landscape and could become a significant market mover in the coming days.
We’re also still seeing the ripple effects of Donald Trump’s recent remarks. His open call for a rate cut and the removal of Jerome Powell from the Federal Reserve continues to weigh on the US dollar, which is under pressure again this morning.
On the currency front, in addition to dollar weakness, the Canadian dollar is also struggling. Meanwhile, strength is visible in Japanese yen, Swiss franc, euro, and New Zealand dollar, which are currently leading gains on the forex board. The movement suggests a partial return to safe havens and commodity-linked currencies.
Commodity markets also bring some notable action. Precious metals are starting the week strong, with gold and silver climbing higher, likely benefiting from risk-off sentiment. On the other hand, oil is sharply lower, already down around 2% in early trading. This drop adds to the mounting pressure on energy markets amid ongoing global tensions and fears of slowed demand.
As for indices, US futures opened the week in red, and are now flirting with recent short-term lows. This weakness in the equity markets may signal continued caution among investors as geopolitical risk resurfaces.
On the macro front, the start of the week is calm in terms of scheduled data. There are no tier-one releases today or on Tuesday, so the focus will remain on geopolitical developments and market sentiment. The real action is expected to begin on Wednesday, when key data releases return to the spotlight.