January 28th, 2026

Dollar weakness isn’t just a trend. It is reshaping global asset flows

Investors are navigating a landscape defined by uncertainty, muted risk appetite, and a growing divergence between headline optimism and underlying fragility. The Federal Reserve’s first policy decision of 2026 looms large, scheduled for 3AM Singapore time on Thursday, and markets have already begun pricing in cautious expectations.

This tension is underscored by a sharp drop in consumer confidence, which tumbled to 84.5 in January from 94.2 in December, the lowest reading since 2014. Such a precipitous decline suggests that households are increasingly wary of economic conditions, possibly anticipating labor market softness or broader financial instability. Compounding this unease is the rising probability of a partial US government shutdown, fueled by political friction in Minnesota, adding another layer of near-term volatility to an already fragile outlook.

Despite these headwinds, the baseline economic forecast remains cautiously optimistic. Real GDP growth for 2026 is projected at 1.7 per cent, supported by a confluence of fiscal stimulus, accommodative monetary settings, and regulatory frameworks designed to cushion against recessionary forces. This resilience appears unevenly distributed. The equity market’s mixed performance on Tuesday, with the Dow Jones down 0.83 per cent while the S&P 500 and Nasdaq rose 0.41 per cent and 0.91 per cent respectively, mirrors this dichotomy. A steep selloff in health insurers offset gains driven by anticipation around megacap earnings, revealing how sector-specific dynamics can override broad market narratives. In this context, overreliance on a narrow set of tech giants becomes a strategic vulnerability. Diversification into the S&P Equal Weighted or Low Volatility Index offers a more balanced exposure, while selective allocations to cyclicals like financials and industrials and defensives such as targeted healthcare segments can hedge against both slowdowns and unexpected rallies.

Fixed income markets reflect similar caution. Treasury yields moved in opposite directions on Tuesday, with the 10-year yield edging up two basis points to 4.23 per cent while the two-year yield dropped more than two basis points to 3.57 per cent. This flattening of the yield curve hints at investor skepticism about near-term growth prospects, even as longer-term inflation expectations remain anchored.

The recommendation to extend duration and accumulate high-quality fixed income, particularly in developed and emerging market investment grade, aligns with a defensive posture that anticipates further monetary easing. With two rate cuts still expected in the second and third quarters of 2026, bond investors are positioning for a pivot that will likely be triggered by labour market deterioration, even if delayed data obscures the full picture for now.

Currency markets tell perhaps the most compelling story of shifting power dynamics. The US Dollar Index plunged 1.28 per cent to close at 95.80, its weakest level in nearly four years. President Trump’s public indifference to the dollar’s slide only reinforced market perceptions that US policymakers may tolerate or even welcome a weaker greenback to support exports and ease debt burdens.

The euro surged to its highest level against the dollar since June 2021, while the yen rallied sharply, closing 1.27 per cent lower against the dollar at 152.19, buoyed by speculation of coordinated rate checks between Washington and Tokyo. This broad-based dollar weakness is not merely a technical development. It reshapes global capital flows and redefines asset attractiveness. For risk assets priced in dollars, including commodities and crypto, a falling DXY lowers entry barriers for foreign investors and amplifies returns when converted back into stronger currencies.

Speaking of commodities, Brent crude jumped 3.02 per cent to 67.57 dollars per barrel following a winter storm that paralyzed US Gulf Coast exports, illustrating oil’s persistent sensitivity to supply shocks. The structural outlook remains cautious, given ample global inventories and tepid demand signals. Gold, meanwhile, soared 2.4 per cent to a record 5,136.47 dollars per ounce, cementing its role as the ultimate hedge amid geopolitical strain and economic ambiguity. The metal’s ascent underscores a flight to safety that extends beyond traditional bonds, especially as correlations between gold and the total crypto market cap reach a striking plus 0.84. This unusual alignment suggests that both assets are increasingly viewed through the same lens, as alternatives to fiat systems perceived as unstable or manipulated.

In Asia, regional equities responded positively to the dollar’s retreat and improved global risk tone. South Korea’s Kospi led with a 2.7 per cent gain, powered by memory chip stocks, while Hong Kong’s Hang Seng and Japan’s Nikkei added 1.4 per cent and 0.8 per cent respectively. These moves highlight how emerging and developed Asian markets benefit disproportionately from dollar depreciation and liquidity expansion.

Against this backdrop, the crypto market’s modest 0.77 per cent rise over the past 24 hours and 0.92 per cent weekly gain appears understated but meaningful. The move is not driven by speculative frenzy but by two converging fundamentals. First, a PayPal survey released on January 28, revealed that 39 per cent of US merchants now accept cryptocurrency, with 84 per cent expecting mainstream adoption within five years. This is not just optimism. It is evidence of infrastructure maturing beyond trading platforms and into real commerce. Second, the dollar’s collapse below 96 creates a historically bullish macro setup for Bitcoin and other digital assets. When the DXY weakens, crypto often thrives, not as a tech stock proxy, but as a non-sovereign store of value.

The surge in perpetuals trading volume by 16.08 per cent and the turn to positive funding rates signal that speculators are returning, but this time with a foundation of utility and macro support. The question now is whether sustained merchant adoption can offset structural pressures like shrinking stablecoin supplies. If real-world usage continues to grow while the dollar remains under pressure, crypto may transition from a volatile satellite asset to a core component of diversified portfolios. The current moment, quiet as it seems, could mark the beginning of that shift.

Source: https://e27.co/dollar-weakness-isnt-just-a-trend-it-is-reshaping-global-asset-flows-20260128/

Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com

j j j

January 22nd, 2026

Trump’s Davos reversal sparks massive relief rally in global stocks, cryptocurrencies

I see a powerful reversal in global markets today, driven by a sudden calming of geopolitical waters that had only recently threatened to boil over. The primary catalyst was American President Donald Trump stepping back from the brink of a trade conflict with Europe. This immediate de-escalation saw a massive rotation back into riskier assets, effectively erasing the previous session’s sharp sell-off and highlighting just how sensitive modern markets are to political rhetoric.

My observation is that we live in an era in which a single statement from a world leader can swing billions of dollars in value in mere hours. The abandonment of tariff threats, framed around a supposed framework deal over Greenland at the World Economic Forum in Davos, instantly surged investor appetite for risk. This dynamic makes market stability a fragile thing, tethered closely to the whims of political negotiation.

US stock markets ended the day sharply higher, with every major index gaining over 1.1 per cent. The rally was broad and decisive. The Dow Jones Industrial Average ascended 588.64 points, a 1.21 per cent gain, to close at 49,077.23. The S&P 500 advanced 78.76 points, or 1.16 per cent, ending at 6,875.62. The tech-heavy Nasdaq Composite also jumped, adding 270.50 points, a 1.18 per cent rise, to reach 23,224.83. This momentum was not confined to American shores, as Asian markets also registered gains, signalling a global response to eased tensions.

Simultaneously, a potent dose of AI optimism fueled specific sectors. NVIDIA Corp. Chief Executive Jensen Huang’s statements at Davos, emphasising the critical need for multi-trillion-dollar investments in global AI infrastructure, provided a significant boost to chip stocks and related suppliers. This confluence of geopolitical relief and technological foresight created a strong bullish environment for equities.

The shift in sentiment profoundly impacted commodity markets. Safe-haven demand for gold evaporated as the fear gauge dropped, pushing the spot price down nearly one per cent to around US$4,793.63 per ounce. This followed a record peak in the previous session, perfectly illustrating gold’s traditional role as a crisis hedge. Meanwhile, crude oil prices, specifically West Texas Intermediate, edged up slightly to US$60.76 a barrel, a modest rise likely tied to broader economic optimism rather than supply-side concerns.

In the currency and bond markets, moves were more subdued but still reflected the risk-on mood. The euro was largely unchanged against the dollar, trading at US$1.1685. The Japanese yen fell slightly to 158.47 per dollar, a classic sign of receding risk aversion. The yield on 10-year Treasuries advanced one basis point to 4.25 per cent, indicating slightly less demand for the safety of government debt. Investors are now keenly awaiting today’s American economic data releases, including Final GDP and Initial Jobless Claims figures, which could provide the next impetus for market movement.

The cryptocurrency market presented a fascinating, slightly divergent narrative. The broader crypto market rose 0.82 per cent over the last 24 hours, driven by unique internal dynamics involving institutional developments and derivatives activity, even as headline cryptocurrencies Bitcoin and Ether edged lower in the daily market snapshot, with Bitcoin trading around US$89,926.23. My view here is that the crypto market is maturing, developing drivers that are not always perfectly correlated with traditional finance’s daily movements.

The underlying strength in crypto stems from smart money accumulation. On-chain data reveals a clear divergence: Bitcoin whales, holding over 1,000 BTC, accumulated during a recent dip to US$89.4K, while smaller retail wallets sold off. This signals long-term confidence among major players, who see current levels as undervalued. The result was a 49 per cent fall in 24-hour Bitcoin liquidations to US$184.5 million, significantly reducing forced selling pressure and indicating robust underlying support.

Institutional milestones provided further bullish impetus. BitGo priced its initial public offering at US$18 per share, becoming the first major crypto custody firm to go public. This landmark event, coupled with F/m Investments’ filing to tokenise a Treasury exchange-traded fund on-chain, signals maturing infrastructure and regulatory progress. These developments attract traditional capital; indeed, TradFi inflows via ETFs remained stable, with assets under management totalling US$120.7 billion.

The derivatives market is where things get truly dynamic, if a little risky. Perpetual volume spiked 36 per cent to a massive US$1.32 trillion, with average funding rates rising 85 per cent weekly. Short-term traders are clearly leveraging bullish bets. However, open interest fell four per cent, suggesting some profit-taking after recent rallies. High funding rates, around +0.0037 per cent, also increase the inherent volatility risk, underscoring the need for careful management of this momentum.

In conclusion, today’s market activity is a powerful combination of global political relief and targeted sectoral optimism. The crypto uptick reflects strategic whale buying and institutional validation. While technical indicators show the market remains in a state of ‘Fear,’ as indicated by a CMC Index of 34, these underlying factors point toward cautious optimism prevailing.

All eyes are now on Bitcoin’s reaction as it tests the critical US$90K psychological level and on the forthcoming SEC decisions on F/m’s innovative tokenised ETF. The landscape remains complex, but for today, the bulls are firmly in control.

Source: https://e27.co/trumps-davos-reversal-sparks-massive-relief-rally-in-global-stocks-cryptocurrencies-20260122/

Anndy Lian

www.anndy.com

j j j

October 8th, 2025

Global risk-off sentiment emerges as political instability meets cryptocurrency correction

Global financial markets experienced heightened volatility as political upheaval in Japan and France sparked concerns about fiscal stability, while cryptocurrency markets underwent a significant correction despite Bitcoin’s recent record highs. The convergence of unexpected political developments, yield curve steepening, and profit-taking activities created a complex backdrop that tested investor confidence across asset classes.

Political instability drives market uncertainty

The most significant catalyst for Tuesday’s risk-off sentiment emerged from unexpected political developments in two major economies. In Japan, Sanae Takaichi’s surprise victory in the Liberal Democratic Party leadership election sent shockwaves through currency markets. Takaichi, a hardline conservative positioned to become Japan’s first female prime minister, represents a stark departure from market expectations and has already begun reshaping the political landscape.

The implications of Takaichi’s victory extended beyond domestic politics. Her appointment of key allies to senior positions, including Suzuki Shunichi as secretary-general and Arimura Haruko as chairperson of the General Council, signaled a consolidation of conservative power within the LDP. These developments have raised concerns about the party’s ability to maintain its coalition with the centrist Komeito party, as the Buddhist-affiliated group has expressed “significant worries and concerns” about Takaichi’s positions.

The political uncertainty in Japan was compounded by an equally dramatic crisis unfolding in France. Prime Minister Sébastien Lecornu resigned after merely 26 days in office, becoming the third government to collapse in recent months. Lecornu’s departure highlighted the persistent political gridlock that has plagued France since President Emmanuel Macron’s decision to call snap elections in 2024 resulted in a hung parliament.

France’s political instability has deep structural roots. The country’s deficit reached 5.8 per cent of GDP in 2024, while national debt stands at 114 per cent of GDP, representing the third-highest public debt burden in Europe. This fiscal strain has made it increasingly difficult for any government to secure parliamentary support for necessary budget measures, creating a cycle of political instability that shows no signs of abating.

Currency markets react to political developments

The Japanese yen bore the brunt of the political uncertainty, extending its decline to 151.90 against the dollar, marking its weakest level since February. This continued weakness reflects market concerns about Takaichi’s pro-stimulus stance and her potential impact on Bank of Japan monetary policy. Currency traders have reduced their expectations for aggressive interest rate hikes, given Takaichi’s historical support for accommodative monetary policy.

The yen’s decline represents part of a broader trend that has seen the currency lose more than one-third of its value since early 2021. The fundamental driver remains the substantial interest rate differential between Japan and other major economies, with US short-term rates at 5.25-5.5 per cent compared to Japan’s 0-0.1 per cent range. This gap has created attractive carry trade opportunities, where investors borrow yen at low rates to invest in higher-yielding currencies.

Meanwhile, the US Dollar Index strengthened for a second consecutive day, reaching 98.58. This rise reflected both safe-haven demand amid global political uncertainty and the relative stability of US economic fundamentals. The dollar’s strength was broad-based, with gains registered against all G-10 currencies as investors sought refuge in what they perceived as the world’s most liquid and stable currency market.

Bond markets signal fiscal concerns

The global yield curve steepening that accompanied Tuesday’s political developments reflected renewed concerns about fiscal sustainability. US Treasury yields provided a mixed picture, with the 2-year yield declining 2.5 basis points to 3.564 per cent while the 10-year yield fell 2.9 basis points to 4.123 per cent. This flattening of the yield curve suggested that while investors remained concerned about near-term economic growth, longer-term inflation expectations remained elevated.

The bond market movements were particularly significant given the backdrop of the ongoing US government shutdown. The political stalemate in Washington, which began on October 1, has delayed key economic data releases and heightened policy uncertainty. Despite this domestic political challenge, US Treasuries continued to benefit from safe-haven flows as investors sought quality assets amid global uncertainty.

The government shutdown has created operational challenges across multiple federal agencies. The Labor Department indicated that only 3,100 of its roughly 12,900 employees would remain on the job, while the Bureau of Labor Statistics would operate with just one employee. These staffing reductions have delayed critical economic data releases, including the Consumer Price Index, which could impact Social Security cost-of-living adjustments.

Equity markets show mixed performance

US equity markets declined overnight, with the S&P 500 falling 0.4 per cent, the Nasdaq dropping 0.7 per cent, and the Dow Jones decreasing 0.2 per cent. The technology sector led the decline as investors engaged in profit-taking following a strong recent run. This correction came despite generally positive underlying economic fundamentals and continued optimism about artificial intelligence applications.

The contrast was stark in Asian markets, where Taiwan’s TAIEX surged 1.68 per cent to a fresh record high as the island resumed trading after a holiday. The rally was driven by continued optimism about artificial intelligence demand, with Taiwan’s semiconductor sector benefiting from robust global appetite for AI-related hardware and applications. Taiwan’s market performance highlighted the geographic divergence in investor sentiment, with Asian markets showing greater resilience to global political uncertainty.

Taiwan’s exceptional performance reflected its central position in the global technology supply chain. The TAIEX has gained 28 per cent in 2024, making it the best-performing major Asian market. This outperformance has been driven primarily by electronics shares, which account for more than 70 per cent of TWSE market capitalisation and have surged 43.2 per cent on the continued AI boom and US tech stock rallies.

The strength in Taiwanese equities also extended to individual companies. TSMC, the world’s largest contract chip manufacturer, has seen its shares rise significantly as the company continues to benefit from the growing demand for artificial intelligence. Other technology companies, including Foxconn and Quanta Computer, have also seen their shares rise, driven by the surge in demand for AI servers.

Commodity markets reflect global uncertainty

Commodity markets provided mixed signals as investors grappled with competing forces. Brent crude oil settled marginally lower at US$65.45 per barrel as traders assessed OPEC+’s latest supply decisions. The oil cartel’s decision to increase collective production by 137,000 barrels per day starting in November was smaller than market expectations, providing some support to prices.

The modest nature of OPEC+’s output increase reflected the group’s cautious approach amid concerns about global demand and potential oversupply. Analysts noted that the decision fell short of market expectations for a more aggressive increase, suggesting that OPEC+ members remain concerned about the outlook for oil consumption. The group’s restraint was particularly notable, given predictions for a global supply surplus in both the fourth quarter and the following year.

Gold, traditionally viewed as a safe-haven asset, gained 0.6 per cent to reach a new record high, driven by the US government shutdown and the political crisis in France. The precious metal’s rally reflected its enduring appeal during periods of political and economic uncertainty. Gold prices have surged over 31 per cent this year, breaking several previous records as investors seek protection against inflation and currency debasement.

The gold rally was particularly pronounced during Asian trading hours, suggesting strong demand from emerging market investors and central banks. This geographic pattern has become increasingly common in 2024, with much of gold’s price appreciation occurring outside traditional Western trading hours. The trend reflects the growing influence of Asian investors and central bank purchasing in driving gold demand.

Cryptocurrency market correction

Despite Bitcoin reaching a new all-time high above US$126,000 earlier in the week, the cryptocurrency market fell 2.69 per cent in the past 24 hours. This correction was driven by a combination of profit-taking after recent gains, ETF outflow concerns, and high leverage unwinding. The pullback highlighted the volatile nature of digital asset markets and their sensitivity to both technical and fundamental factors.

The most significant concern emerged from ETF flow reversals. Grayscale’s Bitcoin ETF experienced US$28.6 million in outflows, marking its first negative day in three weeks. This development was particularly noteworthy given that Bitcoin ETFs had been experiencing strong inflows, with total net inflows reaching US$3.2 billion in the first week of October.

The cryptocurrency market’s leverage structure amplified the correction. Perpetuals volume spiked 22 per cent to US$540 billion, with over US$20 million in liquidations adding downward pressure to prices. This leverage flush turned what might have been a routine pullback into a more significant correction, as over-leveraged positions were forced to close.

Market sentiment indicators reflected the changing mood among cryptocurrency investors. The Fear & Greed Index dropped from 62 (Greed) to 55 (Neutral) as Bitcoin failed to hold its US$126,000 all-time high. This shift from greed to neutral territory suggested that some of the speculative excess had been removed from the market, potentially setting the stage for more sustainable price appreciation.

Central bank policies and market outlook

The divergent monetary policy stances of major central banks continued to influence market dynamics. The Federal Reserve’s gradual approach to interest rate normalisation contrasted sharply with the Bank of Japan’s ultra-accommodative stance, creating opportunities for carry trades that have contributed to yen weakness.

Market participants are closely watching for signs of policy coordination among major central banks. The current environment of divergent monetary policies has created significant cross-border capital flows and currency volatility that could become destabilising if left unchecked. The political developments in Japan and France have added another layer of complexity to this already challenging policy environment.

Looking ahead, investors will be monitoring several key developments. The resolution of political crises in Japan and France will be crucial for market stability. In Japan, Takaichi’s ability to maintain the LDP’s coalition with Komeito will determine the government’s effectiveness and longevity. In France, President Macron’s next steps will determine whether the country can break out of its current political gridlock.

The global economic outlook remains uncertain, with multiple factors contributing to market volatility. Political instability in major economies, divergent monetary policies, and ongoing geopolitical tensions have created a complex environment for investors. While some markets, particularly in Asia, have shown resilience, the broader trend suggests that volatility will remain elevated as these various factors continue to evolve.

The current market environment underscores the interconnected nature of global financial systems. Political developments in individual countries can quickly spread, affecting currency, bond, and equity markets worldwide. This interconnectedness means that investors must remain vigilant about political developments across multiple jurisdictions, as local events can have global implications for portfolio performance and risk management strategies.

Source: https://e27.co/global-risk-off-sentiment-emerges-as-political-instability-meets-cryptocurrency-correction-20251008/