Insights

Financial markets began 2026 with heightened volatility, marked by broad weakness in the US dollar, which underperformed most major currencies. The dollar decline was largely driven by heightened geopolitical uncertainty, including President Trump’s remarks regarding Greenland, renewed tariff threats toward South Korea and Canada, and rising tensions involving Iran. While the dollar staged a partial recovery late in the month following the nomination of former governor and noted inflation-hawk Kevin Warsh as the next Federal Reserve Chair, the greenback remained under pressure.

The Japanese yen initially weakened as Prime Minister Takaichi called for a snap election to advance fiscal reforms but later rebounded sharply amid speculation of coordinated US-Japan intervention after rate checks by authorities from both nations. Meanwhile, the euro reached a high of $1.2081, supported by dollar weakness and diverging ECB-Fed policy expectations, with the ECB expected to remain on hold and the Fed projected to cut rates twice this year. Sterling similarly benefited from the dollar’s decline. Gold surged to record highs before experiencing a sharp sell-off, driven by tighter margin requirements imposed by the CME Group and liquidity disruptions linked to the suspension of the silver SDIC ETF in China. These factors forced widespread deleveraging, intensifying the downturn across precious metals markets.

January 2026 laid out a challenging trading environment for the IXI strategy. Market conditions were dominated by excessive volatility, most notably in precious metals, where abrupt price moves and sharp short-term reversals were quite common. A pronounced correction toward the end of the month further amplified market stress. These conditions formed a demanding landscape for our systematic strategy which faced reduced signal persistence and higher execution costs. Despite the limitations, the strategy recovered its earlier drawdowns and ultimately finished the month on a positive note. Looking ahead, we expect a more stable environment where moderate volatility and improved liquidity should allow the strategy to operate more efficiently and better capture opportunities as they emerge.