Market Update: US Capture of Venezuelan Leader Maduro and Immediate Economic Response

Overview of Market Reaction

The recent capture of Venezuelan President Nicolás Maduro and his spouse by US forces remains the predominant headline today. Despite the geopolitical significance, the immediate impact on financial markets has been relatively muted. Oil prices have stabilized with little variation, the US dollar is generally stronger against major and emerging market currencies, and equity markets are showing modest gains. Concurrently, benchmark government bond yields have softened across several regions. The People’s Bank of China (PBOC) set the US dollar’s reference rate at its lowest level since October 2024.

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Foreign Exchange Markets

G10 Currencies

– **Euro (EUR/USD):** The euro continued its decline that began on Christmas Eve, falling to nearly $1.1670, reaching the initial retracement target of its rally since late November. Immediate support is seen near $1.1650, while resistance is anticipated around $1.17.

– **Japanese Yen (USD/JPY):** Following an early high of 157.30 yen per dollar, a two-week peak, the dollar reversed and retreated to roughly 156.50, the level observed last Friday. A further dip below this threshold may prompt tests of 156.20 and potentially 155.75.

– **British Pound (GBP/USD):** The pound exhibited limited movement, fluctuating between approximately $1.3415 and $1.3475. It held support around $1.3400 but requires a break above $1.3500 to improve its momentum. Recent highs were recorded in the $1.3530 to $1.3550 range.

– **Canadian Dollar (USD/CAD):** The US dollar found a bottom near CAD1.3645 on December 26, then rallied to nearly CAD1.3750 pre-weekend and approached CAD1.3790 during the current session. Resistance and technical objectives lie in the CAD1.3790 to CAD1.3805 corridor.

– **Australian Dollar (AUD/USD):** The Australian dollar gained support around $0.6665, close to its 20-day moving average, rebounding to near $0.6690 during European trading hours. The pre-weekend high was just above $0.6705.

Emerging Market Currencies

– **Mexican Peso (MXN/USD):** The peso reached a year-to-date high last week as the dollar softened slightly to MXN17.87. The dollar remained above MXN17.90 and briefly breached MXN18.03, marking its highest level since mid-December. A daily close above 18.00 may indicate the onset of a corrective phase.

– **Chinese Yuan:** The PBOC maintained its policy to lower the dollar’s fixing rate, setting it at CNY7.0230. Offshore, the dollar held near its pre-weekend low at CNH6.9665, rising to approximately CNH7.9830. Onshore, the yuan gapped lower, falling to a new low at CNY6.9780 before stabilizing, undercutting the December 31 low of CNY6.9870.

– **Indian Rupee (INR/USD):** The US dollar strengthened to INR90.2925, the highest since December 19, with potential near-term upside targeting INR90.44.

– **Venezuelan Bolivar:** Early indications show the dollar gaining roughly 2.75% against the bolivar.

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Other Markets

Equities

Global equity markets posted gains today. The vast majority of Asia Pacific indices rose by over 1%, with South Korea’s Kospi leading the advance at 3.4%. Europe’s Stoxx 600 index climbed approximately 0.35%, while US futures demonstrated resilience, with the Nasdaq futures up around 0.65% and the S&P 500 futures gaining roughly 0.3%.

Government Bond Yields

Benchmark 10-year yields increased by six basis points in Japan but decreased by four basis points in Australia. European sovereign yields softened marginally, and the US 10-year Treasury yield declined about three basis points to near 4.16%.

Commodities

Gold prices increased, reaching nearly $1,440 per ounce, a five-session high, yet remaining below the record peak of roughly $1,550 observed late last year. February West Texas Intermediate (WTI) crude oil fell to $56.30, its lowest since December 19, before rebounding to about $57.75. The last trading day of 2025 saw prices near $58.55.

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Market Drivers and Sentiment

The US dollar is broadly firmer against most G10 currencies, with the yen and pound demonstrating the greatest resilience by posting minor gains. Prior to the Venezuelan developments, expectations had already pointed to a strengthening dollar trend.

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Economic Data Releases

United States

This week’s data schedule culminates with the US December jobs report. Key releases today include the ISM Manufacturing PMI and December auto sales. The ISM manufacturing index has remained below the expansion threshold of 50 since February, declining to 48.2 in November, which was the second-lowest reading for 2025. US auto sales have increased year-to-date, averaging an annualized pace of 16.13 million units through November, compared with 15.68 million units in the first 11 months of 2024. Tariff concerns may have incentivized consumers to accelerate vehicle purchases ahead of potential levies.

United Kingdom

Recent data showed mixed signals in UK consumer credit and mortgage markets. Consumer credit figures for November exceeded expectations, while net mortgage lending edged upward despite a modest decline in mortgage approvals.

Japan

The final manufacturing PMI was reported at 50.0, slightly higher than the preliminary 49.7 and marking the best reading since June 2025’s 50.1 peak.

China

China concluded its PMI releases for the month with the RatingDog (formerly Caixin) reports. The services PMI dipped marginally to 52.0 from 52.1, while the composite PMI inched up to 51.3 from 51.2. The focus now shifts to Friday’s December Consumer Price Index (CPI) and Producer Price Index (PPI) releases.

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Disclaimer

This report is provided for informational purposes only and does not constitute financial advice or an offer to buy or sell any assets. Investors should conduct their own due diligence before making investment decisions.