05/01/2026 - 08:00 UTCThe USDX climbed above the 98.50 level, extending its gains for a second consecutive session to trade near 98.60 during Asian hours. This upward trend, which includes a 0.5% rise over the last week, is driven by increased safe-haven demand following the US capture of Venezuelan President Nicolas Maduro. Market participants are closely monitoring geopolitical risks as President Trump suggested Washington would oversee a transition in Venezuela and warned of potential military interventions elsewhere in the region. Additionally, investors are awaiting the release of ISM Manufacturing PMI data later today to gauge the health of the US economy.
Regarding monetary policy, traders are currently pricing in two additional Federal Reserve rate cuts for 2026, following a 25 bps reduction in December 2025 that brought the target range to 3.50%–3.75%. While FOMC minutes indicate a preference for pausing cuts if inflation continues to decline, the market is bracing for the nomination of a new Fed chair in May to replace Jerome Powell. This potential leadership change is expected to influence the trajectory of interest rates, particularly as the administration seeks a policy tilt toward lower borrowing costs amid a cooling labor market and persistent inflation.
Asian stock indices rose sharply on Monday, kicking off the first full trading week of the new year on a strong note as technology and semiconductor shares extended a powerful rally from year-end. Chipmakers rose on expectations that demand for advanced processors and memory chips will remain robust in 2026. Asian markets were benefiting from their heavy exposure to the global semiconductor supply chain. Risk appetite in the region appeared largely unaffected by geopolitical tensions after the United States launched an attack on Venezuela and captured President Nicolas Maduro over the weekend.
China SSE and China SZSE gained 1.36% and 2.23% respectively as of 07:36 AM GMT. The blue-chip Shanghai Shenzhen CSI 300 also rose, despite a private survey showing China’s services activity expanded at its slowest pace in six months in December, according to the RatingDog services PMI. While the index remained in expansionary territory, softer growth in new business highlighted lingering headwinds. In contrast, the Hong Kong 50 fell by 0.38%. The Japan 225 climbed 1.02% as of 07:36 AM GMT. Technology and chip-related shares led the momentum, contributing to the broader market gains as the TOPIX index hit a new record high of 3,486.0 points.
Individual stocks saw significant movement on Monday. Advantest surged 8.25%, while Tokyo Electron also saw gains. In South Korea, SK Hynix and Samsung rose by 2.22% and 7.57% respectively, as the KOSPI reached a record peak.
The main US equity indices moved as Wall Street closed last week on a mixed note, with futures mostly steady during Asia hours on Monday. Despite the lack of a traditional “Santa Claus” rally at the end of last year in the US, Asian markets found support in the chip sector. Investors are also monitoring developments following the capture of Nicolas Maduro, with Trump suggesting Washington would oversee a transition in Venezuela.
In the week ahead, market participants will focus on key economic signals. In addition to the highly anticipated Non-Farm Employment Change and Unemployment Rate data, markets will anticipate the ISM Manufacturing and Services PMIs, ADP Non-Farm Employment Change, JOLTS Job Openings, Unemployment Claims, and Prelim UoM Consumer Sentiment and Inflation Expectations to gauge the health of the economy heading into 2026.
The EUR/USD pair remains under pressure, trading below the 1.1700 level during Asian trading on Monday, as demand for the US Dollar strengthens amid renewed geopolitical tensions. The Greenback is benefiting from safe-haven inflows following reports that the United States has captured Venezuelan President Nicolás Maduro.
According to media reports over the weekend, the administration of US President Donald Trump ordered a large-scale military operation in Venezuela that resulted in Maduro’s capture without prior congressional approval. President Trump stated that the US would temporarily administer Venezuela until a “safe, orderly, and judicious” political transition is achieved, fueling concerns over heightened geopolitical risk.
Despite the current strength of the US Dollar, its upside may be limited by growing expectations that the Federal Reserve will implement two additional interest rate cuts in 2026. Markets are also anticipating that President Trump will nominate a new Federal Reserve Chair when Jerome Powell’s term expires in May, a development that could steer monetary policy toward a more accommodative stance.
Meanwhile, the Euro may find some underlying support as monetary policy paths diverge between the European Central Bank (ECB) and the Federal Reserve. The ECB left interest rates unchanged at its December 2025 meeting and signaled that policy is likely to remain on hold for an extended period. ECB President Christine Lagarde emphasized that elevated uncertainty continues to complicate the delivery of clear forward guidance.
Bitcoin edged higher on Monday, tracking a broader rebound in technology stocks, although gains remained limited amid investor caution over escalating geopolitical tensions following a US military operation in Venezuela.
The world’s largest cryptocurrency rose 1.15% as of 07:14 AM GMT on iForex platform, benefiting from renewed optimism in technology shares, particularly those linked to artificial intelligence. Bitcoin has historically shown a positive correlation with tech stocks, and the broader crypto market also recorded modest gains in line with this trend.
However, sentiment remained fragile as markets assessed the fallout from a US offensive against Venezuela that resulted in the capture of President Nicolás Maduro. President Donald Trump stated that Washington would temporarily govern Venezuela until a new leader is elected and signaled plans to open the country’s oil industry to foreign investment.
The heightened geopolitical risk boosted demand for traditional safe-haven assets, with both gold and the US Dollar receiving strong inflows, limiting upside momentum in risk-sensitive assets such as cryptocurrencies.
Looking ahead, investor focus this week is also on a series of key economic releases, most notably US nonfarm payrolls data for December, which could influence expectations around Federal Reserve policy and broader market risk appetite.
Despite Monday’s gains, Bitcoin remains under pressure on a longer-term basis, having declined more than 6% in 2025. While prices reached multiple record highs last year on optimism over a more crypto-friendly regulatory environment under the Trump administration, momentum faded in the final quarter.
Oil prices swung between gains and losses during volatile Asian trading on Monday after the United States captured Venezuelan President Nicolás Maduro over the weekend and announced plans to assume control of the country, unsettling energy markets already grappling with oversupply concerns. Prices had climbed as much as 0.5% earlier in the session before surrendering those gains.
Markets were also digesting a decision by OPEC+ to keep oil production levels unchanged, despite rising political tensions between key members Saudi Arabia and the United Arab Emirates linked to an escalation in the Yemen conflict.
Oil prices remain under significant pressure, having fallen more than 18% in 2025—marking their steepest annual decline in five years—as fears of a global supply glut and weakening demand continued to weigh on sentiment.
US forces captured President Maduro during a weekend operation, with the Venezuelan leader expected to face drug-trafficking charges in New York. President Donald Trump stated that Washington would administer Venezuela until a new leader is elected, adding that major US oil companies would be allowed to enter the country and take control of its oil production.
Venezuela holds the world’s largest proven oil reserves, but output has deteriorated in recent years due to aging infrastructure and the impact of US sanctions, which have sharply curtailed exports. Analysts said US involvement in Venezuela’s energy sector could eventually boost global oil supply, potentially adding further downward pressure on crude prices, although such an outcome would likely materialize gradually.
Oil markets were also responding to OPEC+’s decision over the weekend to maintain current production levels. The decision followed a brief meeting that did not address rising tensions within the group, according to reports.
US stock index futures were little changed on Sunday evening as investors assessed heightened geopolitical risks following a US military operation in Venezuela that resulted in the capture of President Nicolás Maduro.
Wall Street ended last week on a mixed note, failing to deliver a traditional “Santa Claus” rally. Markets entered the first full trading week of January facing renewed uncertainty after an unexpected escalation in US-Venezuela tensions over the weekend. US forces launched strikes in Venezuela and detained President Maduro, who was flown out of the country to face charges.
Beyond commodities, the geopolitical developments raised broader concerns about near-term market volatility, keeping risk appetite in check.
With year-end trading marked by thin liquidity and uneven performance, investors are now turning their attention to upcoming economic data. The US December nonfarm payrolls report, due on Friday, is expected to play a key role in shaping expectations for Federal Reserve policy.
Markets are currently pricing in two additional 25-basis-point interest rate cuts in 2026 following the Fed’s latest easing in December. However, growing divisions among policymakers have kept traders cautious as they await fresh economic signals.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
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