🧠Venezuela shock, strong gold and a firmer dollar

Published: 1/5/2026

Overall Market Sentiment:

Markets are starting the first full week of 2026 in a cautiously risk-on mood, but with a clear safety premium after a turbulent weekend. The dollar index is grinding up toward recent highs near 98.5–99, equities are steady to slightly higher, volatility is still in the mid-teens, and gold has ripped above 4,400 dollars an ounce as traders balance geopolitical shocks with still-easy financial conditions.

Geopolitics

It has been an extremely chaotic weekend. A large scale US operation captured Nicolás Maduro in Venezuela, with talk from Washington about being in charge of the country and open threats of possible military action toward Colombia, Mexico and even Cuba.

At the same time, tensions remain high elsewhere. China just finished record blockade style drills around Taiwan and Ukraine has stepped up deep drone strikes inside Russia, triggering daily air defense activity and flight disruptions around Moscow.

Markets are channeling this into a classic mix. The US dollar is firmer, demand for havens like gold and the Swiss franc is elevated but orderly, and oil is only moving modestly as traders weigh Venezuela supply risks against still soft global demand. Brent is oscillating around 61 dollars a barrel, which has become a key reference level for whether the energy shock stays contained or starts spilling more clearly into inflation expectations.

The macro calendar adds another layer of potential volatility. US ISM manufacturing hits today and the delayed December payrolls report arrives on Friday 9 January, both central to how far the Federal Reserve can push its cuts, but not in a hurry message.

Currency outlooks

🔺 USD

The dollar has started 2026 on the front foot, with the broad index up about a quarter of a percent and back near multi week highs as markets refocus on US data rather than only geopolitics. The policy backdrop is a Fed funds range of 3.5 to 3.75 percent, after 75 basis points of cuts in 2025, and futures still imply roughly two more cuts this year, though with growing debate about whether the next move is as soon as March or later.

For this week, the near term risk for the dollar is skewed to further strength if ISM and especially Friday’s payrolls come in close to or above consensus, since that would reinforce the idea that policy is slightly restrictive but not yet too tight. On the other hand, the medium term structure still looks more like a gentle downtrend in the dollar, because the US is already well into its easing cycle while the ECB and others are mostly on hold.

Technically, many participants are treating the 98–100 zone on the dollar index as an initial ceiling and the mid 97s as near term support, so data surprises around those levels could amplify moves.

🔻 EUR

The euro is trading around the low 1.17s against the dollar, near the bottom of the recent 1.1710–1.1800 range, as the rate gap with the US and the latest safe haven bid for the greenback weigh on the single currency. The ECB deposit rate is parked at 2.0 percent and officials have clearly shifted into a rates are in a good place mode, with markets pricing little change through most of 2026 unless growth or inflation surprise sharply.

For the week ahead, euro traders are juggling three forces: US data risk, eurozone inflation dynamics, and a renewed geopolitical premium given proximity to both Ukraine and energy markets affected by Venezuela. A steady or softer eurozone inflation print would reinforce the idea that the ECB can sit still while the Fed may still be cutting, which tends to cap any EURUSD rallies.

From a reference level perspective, many desks are watching 1.1710 as first support, then the mid 1.16s, with 1.18–1.1850 now acting as resistance on bounces. Overall, near term risks look skewed toward further euro softness against the dollar if US data print firm and geopolitical stress keeps the haven bid alive.

🔻 GBP

Sterling has slipped modestly below the mid 1.34s against the dollar, giving back some of its strong 2025 performance as the dollar firms and markets digest the Bank of England’s December cut to 3.75 percent. The UK ended last year with falling inflation but still the highest rate in the G7 and a weak domestic backdrop, so markets are penciling in at least one, possibly two further cuts in 2026, but not on an aggressive timetable.

For the week ahead, GBP is mostly a passenger to US events. ISM and payrolls matter more for the cross than the relatively light UK data slate, though softer UK PMIs or consumer indicators would underline that the BoE has more room to ease than the Fed.

Against the euro, however, GBP is slightly firmer, with EURGBP edging down toward the high 0.86s, reflecting that the BoE is still running a somewhat higher real rate than the ECB.

Technically, many market participants are using the 1.34–1.35 band in GBPUSD as a near term pivot. Holding above 1.34 keeps the structure broadly sideways, while a sustained break below would signal a deeper correction after last year’s roughly 8 percent rise.

⚖️ CAD

The Canadian dollar is softening again, with USDCAD around 1.37–1.38 and drifting toward recent highs even though oil is holding close to 61 dollars. The Bank of Canada has its policy rate at 2.25 percent and is widely expected to hold steady at least through its late January meeting, leaving Canada with a growing rate discount versus the US as the Fed eases more slowly from a higher starting point.

For this week, CAD sits in the crossfire between global risk appetite and oil. The modest bounce in crude after the Venezuela shock could help limit downside, but US data and any further equity wobble could push USDCAD back toward the 1.38–1.39 area that many desks highlight as a resistance zone.

Overall, that leaves the near term risk profile for CAD fairly balanced. There are downside risks versus the dollar if US data surprise positively, but some medium horizon support from a still constructive North American growth and energy story.

🔻 CHF

The franc is slightly weaker against the dollar, with USDCHF hovering just below the 0.80 mark after ticking higher in early 2026 trading. The Swiss National Bank is holding its policy rate at 0 percent and, with inflation projected well below 1 percent for most of 2026, is signaling comfort with a period of very low rates and, if needed, FX interventions instead of a return to negative rates.

That combination means CHF is still a safe haven, but one where authorities are not eager to see further sustained appreciation. In the very short term, the Venezuela and Ukraine headlines usually favour CHF on risk days, yet the stronger dollar and low Swiss yields make it harder for the franc to outperform the greenback consistently.

Against the euro, EURCHF remains relatively stable, reflecting that both the ECB and SNB are in on hold mode, so most of the volatility is channeled through USDCHF instead. From a market reference point, the 0.80 level in USDCHF is now seen as a key pivot, with the high 0.78s as initial support.

⚖️ JPY

The yen is under pressure again, with USDJPY trading in the mid 156s to high 156s after briefly probing above 157, as wide rate differentials still favor the dollar, yet expectations of further Bank of Japan normalization act as a brake on runaway yen weakness. The BoJ has already lifted rates to their highest level in three decades and officials are increasingly confident that a wage price cycle is taking hold, keeping markets pricing more hikes over 2026.

At the same time, global yields outside Japan remain elevated and today’s US data plus Friday’s payrolls can easily nudge Treasury yields higher again, supporting USDJPY in the near term. That leaves the risk balance for JPY mixed. Structurally, the currency is slowly regaining some fundamental support, but tactically it still trades as a funding currency that weakens when risk appetite is healthy and the dollar is bid.

From a levels perspective, many in the market are treating the 154 area as first meaningful support and the 157–158 band as a zone that could attract official attention if volatility spikes or if the yen starts weakening too rapidly.

⚖️ AUD

The Australian dollar is consolidating just below 0.67 against the US dollar after an early session dip under that level, as stronger USD, softer China data and geopolitical jitters offset a relatively hawkish Reserve Bank of Australia. The RBA has kept its cash rate at 3.6 percent, but sticky inflation near 3.8 percent and recent commentary have pushed markets to price a non-trivial chance of renewed hikes as soon as February, which supports Australian front end yields.

This week is light on domestic data, so AUD is likely to move mainly on US releases, China sentiment and any further Venezuela-related swings in risk appetite and commodity prices. From a chart perspective, 0.66–0.67 remains the near term range that many participants focus on, with 0.6700–0.6720 acting as resistance and the low 0.66s as first support.

🔻 NZD

The New Zealand dollar is weaker, sitting around 0.575 against the US dollar after grinding lower over the past month. The RBNZ has already delivered a hawkish cut and more recently signaled a cautious stance on further tightening, which has encouraged markets to fade earlier bets on 2026 hikes and left NZD underperforming in the G10 complex.

For the week ahead, the NZ calendar is quiet, so NZD is mostly a proxy for global risk appetite and China related headlines. The trade-weighted NZD index has softened, underscoring that this is not just a USD story but also relative underperformance against other regional peers.

Technically, traders are using the 0.57 handle in NZDUSD as a rough line in the sand in the very near term, with any bounce toward 0.585–0.59 likely to be seen as a test of whether the broader downtrend from late 2025 remains intact.

Cross-asset wrap

🪙 Gold: Gold is trading around 4,420–4,430 dollars an ounce, up roughly 2 percent on the day as the combination of Venezuela, Ukraine escalation and lingering rate cut expectations revives its role as a dual hedge against geopolitical risk and real rate uncertainty. If US data come in soft and real yields drift lower, the risk remains skewed toward further upside in the near term, even from already elevated levels.

🛢 Oil: Brent is near 61 dollars a barrel, only modestly higher despite the Venezuela shock, which suggests the market currently sees more scope for alternative supply and weak demand than for a sustained supply crunch. For the week, traders are focused on any signs of disruption to Venezuelan exports or shipping lanes and on whether OPEC plus signals changes to its output stance after this weekend’s events.

📈 Stocks: US equity futures are slightly firmer, with S&P 500 minis around 6,920 and VIX futures in the low to mid teens, reflecting a market that is alert to risk but not panicking. The narrative remains that as long as US data point to a slow but not collapsing economy and the Fed cuts gradually, cyclical and tech names can stay supported even as geopolitics turns noisier.

₿ Crypto: Bitcoin has pushed above 93,000 dollars and is on a five day winning streak, helped by a mix of expectations for easier US policy later this year, ETF inflows and a broader hunt for assets that can benefit if traditional policy frameworks look more fragile after dramatic geopolitical moves. Many participants are using the 90,000 area as a psychological reference and watching whether macro data or regulatory headlines upset the current positive tone.

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