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EUR/GBP's fall from 0.8863 extended to 0.8643 last week but recovered since then. Initial bias stays neutral this week for consolidations. Risk will stay on the downside as long as 0.8720 support turned resistance holds. On the downside, decisive break of 0.8631 cluster support (38.2% retracement of 0.8221 to 0.8663 at 0.8618) will pave the way to 61.8% retracement at 0.8466. Nevertheless, sustained break of 0.8720 will bring stronger rally back to 0.8796 resistance instead.

In the bigger picture, rise from 0.8221 medium term bottom (2024 low) is seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8619) should confirm that this corrective bounce has completed. In this case, deeper fall would be seen back to 0.8201/21 key support zone. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.

In the long term picture, price action from 0.9499 (2020 high) is seen as part of the long term range pattern from 0.9799 (2008 high). Range trading should continue between 0.8201 and 0.9499, until there is clear signal of imminent breakout.

EUR/AUD's fall from 1.8160 accelerated to 1.7287 last week but recovered since then. Initial bias remains neutral this week first. Risk will stay on the downside as long as 1.7477 support turned resistance holds. Current decline is seen as the third leg of the corrective pattern from 1.8554. Below 1.7287 will target 1.7245 support, and then 1.6922 fibonacci level. Nevertheless, firm break of 1.7477 will indicate short term bottoming, and bring stronger rebound back to 55 D EMA (now at 1.7645).

In the bigger picture, the break of 55 W EMA (now at 1.7468) argues that fall from 1.8554 medium term top is already correcting whole up trend from 1.4281 (2022 low). Deeper decline is in favor to 38.2% retracement of 1.4281 to 1.8554 at 1.6922, and possibly below. Risk will stay on the downside as long as 1.8160 resistance holds, in case of strong rebound.

In the longer term picture, rise from 1.4281 is seen as the second leg of the pattern from 1.9799 (2020 high), which is part of the pattern from 2.1127 (2008 high). As long as 55 M EMA (now at 1.6610) holds, this second leg could still extend higher.

EUR/CHF's extended recovery last week suggests that fall from 0.9394 has completed at 0.9268, as a corrective move. Initial bias is back on the upside this week and further rally would be seen to 0.9394 resistance. However, firm break of 0.9268 will revive near term bearishness, and bring retest of 0.9178 low.

In the bigger picture, persistent bullish convergence condition in W MACD is a medium term bullish sign. Firm break of 0.9394 resistance should bring sustained trading above 55 W EMA (now at 0.9362). That should indicate medium term bottoming at 0.9178. Further break of 0.9452 resistance will bring stronger medium term rally towards 0.9928 resistance next, even still as a corrective bounce. Nevertheless, rejection by 55 W EMA will retain bearishness for another fall through 0.9178 at a later stage.

In the long term picture, overall long term down trend from 1.2004 (2018 high) is still in progress. Outlook will continue to stay bearish as long as falling 55 M EMA (now at 0.9766) holds.

Monday, Jan 12, 2026

Tuesday, Jan 13, 2026

Wednesday, Jan 14, 2026

Thursday, Jan 15, 2026

Friday, Jan 16, 2026

Week in review – Geopolitical Turmoil on the Menu

Traders have returned to their desks, and volumes are finally normalizing after a holiday period that was anything but boring.

Connecting back to the end-December trading, metals rode a rollercoaster that took many to fresh record highs, setting a bar of high expectations for the new year.

The weekly open did not disappoint. The capture of Venezuelan President Nicolas Maduro by the Trump Administration over the weekend sent shockwaves through the headlines and ignited a wave of excitement across markets.

This reaction is rooted in a clear shift: The revival of the Monroe Doctrine—now dubbed the "Donroe Doctrine"—sets a precedent unseen in decades.

When viewing this alongside recent administration moves, such as renaming the Department of Defense to the Department of War and shifting military assets to the Caribbean, the market's angst transforms into a realization of a new reality.

As the operation unfolded, markets opened a renewed hype: The Freedom Trade.

Newfound excitement surged through the US Stock Market, powering the Dow Jones and traditional sectors beyond year-end records.

Investors are betting that "America First" is no longer just an isolationist slogan, but a policy that places US strategic interests above all else—including international norms.

Stock Market per Sector Performance since beginning 2026 – Source: TradingView

The Market Consequence? Gigantic rallies in Industrials, Materials, Energy, and Consumer Discretionary sectors.

The translation is simple: if US External Policy returns to its past century way of operating—global military dominance and strategic shows of strength—traditional sectors stand to benefit the most. The administration is making it clear: the US is not to be reckoned with.

The Venezuela capture also extended elsewhere.

With threats of intervention now extending to Mexico, Cuba, Colombia, and even Greenland, global heads of state are waking up to defend their interests. The most significant tail risk for sentiment remains the standoff regarding Greenland, which directly challenges the NATO framework.

Amidst the geopolitical noise, markets also received crucial economic clues: the US labor picture is not worsening, and the global economy remains resilient, with Global PMIs staying firmly in expansion territory.

Weekly Performance across Asset Classes

Weekly Asset Performance – January 9, 2026 – Source: TradingView

Metals are once again standing on top of the latest geopolitical developments. Gold is up a sneaky 4% on the week, while Silver and Palladium are up above 11%.

The Week Ahead – CPI and Elevated Tensions

Asia Pacific Markets – Chinese Trade Data and Australian Employment

This week wasn't only interesting for North America.

Japan saw renewed strength in wage growth data, which, combined with hawkish speeches from Bank of Japan members and strong approval ratings, led PM Takaichi to announce snap elections for mid-February. Her aim is to consolidate power; a victory would make her the first officially elected female Prime Minister in Japanese history.

China also released an improved inflation picture. Recent stimulus and a shift toward more business-friendly regulations have sparked a decent rebound from the preceding deflation. As a result, the CNY (Chinese Yuan) is strengthening aggressively and maintaining a higher path.

Looking ahead to next week, markets expect a slew of Chinese data. This includes Trade Reports on Tuesday—which will put hard numbers on the state of a fragmented global trade regime—followed by Retail Sales on Wednesday and GDP data on Thursday. Strong Chinese data tends to have a boosting effect on Antipodean currencies (AUD and NZD).

Speaking of the Antipodeans, traders will also welcome Australian Employment numbers. Following last week's better-looking but still very hot CPI data (3.4% y/y), expectations for this report are high.

A beat here would likely cement the case for a rate hike at the next RBA meeting on February 3.

Europe and UK Markets – UK Employment & GDP mixed with European CPIs

The UK moves to the forefront for the upcoming week.

Following last month's improved inflation data, traders will look to confirm a smoother rate cut cycle for the Bank of England in 2026, provided UK employment figures don't show unexpected strength. The release is scheduled for the Monday-Tuesday overnight session at 2:00 A.M.

Amidst appearances by several BoE members, market participants should also expect the UK monthly GDP numbers on Thursday.

For the Eurozone, ECB Vice President Luis de Guindos—one of the favorites to replace Christine Lagarde—is expected to speak twice. His comments should be tracked closely by EU traders as he looks to cement his standing.

On the data front, attention will turn to inflation, with the French and German CPI releases scheduled for Thursday and Friday, respectively.

North American Markets – US CPI and A LOT of Fed Speakers

The US will finally receive on-time Inflation data, with the CPI (Tuesday) and PPI (Wednesday) releases forming a critical wombo-combo which will be tracked closely by global traders.

Scrutiny is particularly high after the last report raised doubts regarding its accuracy; that print came in at 2.7% (vs. 3.4% expected), with the BLS reportedly taking some liberties to fill data gaps caused by the Shutdown.

The CPI is expected to land at 0.3% Month-over-Month, a sticky read that would almost certainly dash any hopes for a January rate cut (currently priced at just 10%).

Of course, don't forget the US Retail Sales at 8:30, also on Wednesday.

Elsewhere, a parade of Fed officials is scheduled to speak. NY Fed President Williams will headline the slate with appearances on Monday and Wednesday. We will also hear from the new 2026 rotation of regional voters, including Minneapolis Fed President Neel Kashkari, who is also set to speak on Wednesday.

To learn more about the 2026 voting rotation, check out our recent publication:

Who Are the Fed Speakers to Watch in 2026? A New Front-Runner for the Fed Chair

Finally, keep your notifications on for the geopolitical scene: The developing revolution in Iran could have profound implications for Oil markets and the broader global regime.

Next Week's High Tier Economic Events

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (High-tier data only)

Safe Trades and enjoy your weekend!

Canadian Highlights

• Canada’s unemployment rate jumped higher to 6.8% in December as rapid labour force growth outweighed tepid employment gains.
• Canada’s goods trade balance is back in deficit territory. But trade in gold continues to whipsaw both import and export readings, making discerning trends more challenging.
• Prime Minister Carney will visit China next week to discuss investment and trade; a timely meeting on the heels of the U.S./Venezuela situation.

U.S. Highlights

• The payrolls report for December came in weaker than expected, capping off the “low hire, low fire” 2025 jobs market.
• Global oil markets adjusted to the possible return of Venezuelan crude to global markets following U.S. actions in the country.
• Investors will have to stay tuned for the Supreme Court’s ruling on the IEEPA tariffs.

Canada – Jobs, Trade, and Global Shifts

Data flow this week showed the Canadian economy entered the tail end of the year on a slightly positive note. An update to Canada’s job market was the headliner, with job creation totaling a modest 8k for the month of December. While this edged out market expectations, it represents a deceleration from the blistering 60k average gain over the prior three months (Chart 1). The unemployment rate also moved three ticks higher to 6.8%, completely unwinding the sharp drop in November, as the labour force grew at its fastest pace in over a year.

For all the headwinds and headaches, the labour market has put in a not-too-bad showing this year. In fact, the current unemployment rate is only 0.1 percentage points (ppts) above year-ago levels, a much better outcome than forecast in early 2025. Looking ahead, we’re expecting the jobless rate to peak this quarter before drifting lower thereafter as new labour force growth stalls. This report won’t change the Bank of Canada’s (BoC) policy stance, with several important data points due out before their January 28th meeting.

The improvement theme was also seen in the October trade data even though the nation’s trade balance flipped back to into the red. Chart 2 shows that total exports (including gold) have increased by 9% since bottoming in April 2025 and are approximately in line with average export levels for 2024, though those numbers have been lifted by high gold prices. Strip gold out of the equation and exports are up a more modest 2.5% since April 2025 and remain 6% below the 2024 average. Gold now accounts for almost 14% of Canada’s nominal exports, over three times above than its historical average.

There is also some improvement in export diversification. One third of Canadian exports are now being shipped to non-U.S. markets, a level never achieved outside of trade distortions seen during the early days of the pandemic. But again, gold is a big part of the picture. A multi-month surge in unwrought gold exports to the UK has made a sizeable contribution to the rise. Also of note, China has quickly become the main overseas buyer of Canadian crude, which has also helped Canada orient toward East-West trade.

Cultivating this relationship will be important, especially in the wake of the recent U.S./Venezuela situation. We wrote here about the potential near-term risks to Canada’s oil industry, and while minimal, it still strengthens the case for Canada to expedite a new oil pipeline that builds out capacity for Asian shipments. Chinese demand for Canadian crude is set to increase as the U.S. pressures Venezuela to cut ties with China. Canadian oil also has shorter shipping times and flexible tanker options, buoying the case for China to buy more Canadian crude. We are likely to see this discussed next week when Prime Minister Mark Carney visits China to engage in talks around boosting trade and investment.

U.S. – Hiring Slows, Affordability Worries Grow

The world was on tenterhooks this morning as all waited to see if the Supreme Court would rule on the administration’s use of the International Emergency Economic Powers Act (IEEPA) to implement some of its tariffs in 2025. The much-anticipated IEEPA ruling did not come, so the big news of the day is the weaker than expected December jobs report. Private sector hiring slowed, prior months were revised lower, and the number of jobseekers declined, allowing the unemployment rate to fall even as jobs growth slowed. The data reinforce the view that 2025 was a “low hire, low fire” year, characterized by a pronounced deceleration in job growth and a modest rise in the unemployment rate (Chart 1).

Survey data this week were mixed. The ISM Manufacturing Index contracted for a tenth consecutive month, with respondents citing “tariff related pricing pressures” and notable reductions in 2026 capital expenditure plans. By contrast, the ISM Services surprised to the upside, highlighting continued resilience in consumer demand for travel, healthcare, and professional services. The divergence between manufacturing and services has persisted throughout the year, as manufacturing remains more exposed to tariff related uncertainty. Both surveys indicated easing price pressures and softening labour demand, consistent with today’s payrolls release.

Developments in Venezuela added complexity to the oil market backdrop. Markets are assessing the administration’s commitment to the “Donroe Doctrine” and its implications for global oil supply. Despite Washington’s efforts to restore Venezuelan output, significant logistical and political hurdles remain. WTI moved down toward US$57 following the announcement that up to 50 million barrels of seized Venezuelan crude will be released to help address household affordability concerns. Adding to the affordability theme, housing data showed that homebuilding remains subdued, which doesn’t help the cost of housing (Chart 2). The administration has a clear desire to act on this front, promising a ban on institutional investor purchases and demanding government purchase mortgage-backed securities to help lower mortgage rates, though we await details on actual policy actions.

Prior to Friday’s jobs numbers, Federal Reserve officials suggested risks around employment and inflation were broadly balanced. Minneapolis President Kashkari indicated the labour market may be approaching equilibrium, while Richmond President Barkin characterized the economy as “finely tuned,” implying the FOMC would need to give equal weight to prices and employment. This reinforces our view and the view of the market that the FOMC is not in a hurry to cut rates further now, though we do expect to see interest rates come down later this year. We look ahead next week to the release of CPI inflation data, and after being let down by the Supreme Court this week, we are not going to be alone in being eager for news about when they may release decisions next.

Summary

United States: Lukewarm Jobs Report Keeps March Rate Cut in Play

• The December labor data continued to signal a gradual and orderly cooling in the jobs market. We still view that the FOMC will be on hold at its upcoming Jan. 28 meeting and that a couple more rate cuts this year look likely amid the continued moderation in hiring. The Supreme Court did not rule on IEEPA tariffs Friday, but a decision could come as early as next week.
• Next week: CPI (Tue.), New Home Sales (Tue.), Retail Sales (Wed.)

International: Cooling Prices Dominate Global Data

• Global inflation data this week largely signaled easing, with declines in the Eurozone, Sweden, Australia and Mexico. Switzerland, Norway and China saw modest, likely temporary increases. Meanwhile, Japan’s wage growth came in softer than expected.
• Next week: India CPI (Mon.), U.K. Monthly GDP (Thu.)

Topic of the Week: Implications of U.S. Intervention in Venezuela

• Events in Venezuela this past weekend are top of mind for market participants, especially those with exposure to Latin America and oil. While the situation is very much riddled with uncertainty, we do not envisage material or long-lasting financial market disruptions on the basis that markets may have been prepared for political turnover in Venezuela.

Full report here. 

Canadian manufacturing and wholesale reports for November should reinforce that heavily trade exposed sectors are still being negatively impacted by U.S. tariffs, even as we continue to expect increases in household spending to keep overall gross domestic product growth positive.

Statistics Canada's preliminary estimates showed a 1.1% decline in manufacturing sales in November, and a 0.1% increase in wholesales. The reported drop in manufacturing sales was despite a 1% rise in output prices, implying a larger decline in sale volumes.

Much of the weakness appears to have been concentrated in the auto sector— the number of vehicles produced was down 22% from a year ago in November in separately reported data, coinciding with the imposition of new U.S. tariffs on medium and heavy-duty trucks on Nov 1. StatsCan also flagged food manufacturing as a soft spot.

December home resale data on Thursday is expected to show a lackluster finish to 2025 as activity and prices moderated particularly in key markets like southern Ontario and B.C., where inventory is keeping buyers in a stronger negotiating position. Still, we continue to expect improvement in the Canadian economy, and the lagged impact of lower interest rates will support a gradual pick up in housing markets in 2026.

We look for housing starts on Friday to tick higher following a jump in permit issuance into October, and expect overall GDP growth to remain modestly positive in Q4 with continued growth in consumer spending. The advance estimate of retail sales showed a 1.2% increase in November.

In the U.S., we look for consumer price growth to slow on Tuesday and retail spending to remain firm on Wednesday.

2026 kicked off with a significant increase in geopolitical uncertainty, and headlines/fallout from U.S. military action in Venezuela will continue to be closely watched. The view that any significant shift in Venezuelan oil production would take many many years and would be unlikely in volume terms to meaningfully impact Canadian heavy oil production or sales to the United States. We have made no adjustments at this point to our Canadian or U.S. economic outlooks as a result.

Week ahead data watch:

December U.S. inflation data is expected to show soft core consumer price index (ex-food and energy) growth at 0.2% month-over-month, driven by persistent weakness in shelter costs, particularly rent and owners' equivalent rent. A sharp slowing in growth in the rent components between September and November was in part due to methodology issues resulting from the government shutdown that prevented collection/release of October CPI data, but we expect underlying rent price growth has also been slowing. Food prices likely ticked higher after surprising on the downside in November but gasoline prices declined, leaving headline CPI up a similar 0.2% month-over-month and 2.5% year-over-year.

We expect U.S. retail spending remained firm in November, driven in part by a rise in prices at gasoline stations, but also higher auto sales (unit vehicles sales rose 1.7% in November). Further growth in control (ex-auto, gas, and building material) store sales also build on the 0.9% jump in October.

• Geopolitics may try to steal the limelight from US data.
• A possible US Supreme Court ruling on tariffs could dictate market movements.
• Dollar strength might be tested if investors refocus on Fed expectations.
• A crammed data calendar next week, US CPI comes on Tuesday; Fedspeak to intensify.
• Euro weakness persists, lingering risk of deterioration in US-EU relations.

Not the start most investors expected

At the tail end of 2025, most investors focused on Fed rate cut expectations and AI developments further reshaping the global economy. The nonexistent Santa Rally disappointed equity investors, but with most investment banks remaining quite optimistic about the 2026 performance, the mood could not be characterized as negative.

However, these expectations have been put aside, as US President Trump has other priorities. The transfer of Venezuelan President Maduro to the US to face heavy criminal charges and the control of Venezuela’s vast oil reserves, with US firms ready to invest heavily in the aging infrastructure, have changed the market narrative.

With every win, Trump becomes bolder in his strategy. Following the Maduro operation, his focus quickly shifted to Colombia, Cuba and Greenland, bolstering the USA’s foothold in the region after a period of relative inactivity. Greenland is the most intriguing case, as the US is trying to grab land from an ally and NATO member. Few expect this effort to fail, particularly as the US President has not excluded the military option to achieve his target.

Adding Iran to the mix, which was the main topic of discussion at the late-December meeting between Trump and Israel’s Netanyahu, means then 2025, with its tariff shenanigans and the April market rout, might end up being a walk in the park for investors compared to 2026.

Gold remains bid, Oil near multi-year low

Both gold and oil have been quite responsive to the geopolitical developments, moving in opposite directions. Gold rallied towards the $4,500 level before correcting lower, partly dragged by silver’s erratic behaviour, while oil has been drifting lower as the excess supply story for 2026 could get even worse if US firms gradually restore the flow of Venezuelan oil. Coupled with decent chances of a Ukraine-Russia ceasefire, the outlook remains bleak for the oil market, with the five-year low of $55.19 around the corner.

Notably, Secretary of State Rubio is scheduled to visit Denmark next week, carrying Trump’s Greenland offer to Denmark, while the US President is expected to maintain his bold rhetoric on this issue. Gold stands ready to benefit from a likely deterioration of the EU-US relations and the previously unthinkable threat of military use in Greenland.

US tariffs in the spotlight

Amidst this volatile environment, there is growing speculation that on Friday, January 9, the US Supreme Court might announce its ruling on the legality of tariffs, after 10 am EST (3 pm GMT).

Should the ruling be positive, essentially confirming Trump’s ability to impose tariffs without Congress’s consent, Trump could restart his tariff rhetoric, targeting China and particularly Europe. He might feel compelled to threaten the EU with aggressive tariffs as a means to “acquire” Greenland.

If the ruling is negative, branding tariffs imposed using a 1977 law as illegal, Trump’s reaction could prompt an acute market reaction, although his administration has already drawn up a plan B to reimpose the existing tariffs under different legislation.

Gold stands ready to benefit under both aforementioned scenarios, particularly if the ruling deems current tariffs illegal. On the flip side, investors tend to shun the dollar during trade flare-ups, boosting other currencies like the euro and the Swiss franc.

What would be extremely interesting is if the Supreme Court sets boundaries to the President’s power, essentially limiting his ability to authorize tariffs or greenlight military operations without approval from Congress. Such a development could make Trump even more unpredictable going forward.

Normalcy might not suit the Dollar

The US dollar has started the new year on the right foot, outperforming both the euro and the pound, as developments regarding Venezuela have prompted an odd risk-off reaction in markets, with US equities also faring relatively well. The pound performance has been a surprise, with the focus now shifting to Thursday’s monthly GDP print for November.

On the other hand, the lack of new bullish catalysts is contributing to the euro’s current weakness. More importantly, considering Rubio’s visit to Denmark, the euro’s appeal might be dented by the possibility of an aggressive deterioration in US-EU relations, damaging the momentum built in the Eurozone economy due to the much-discussed aggressive fiscal spending. The ECB remains on the sidelines, but a severe economic downturn, mostly driven by a protracted trade flare-up, might be forced to reassess its current balanced policy stance.

US inflation data in the spotlight next week

Putting geopolitics aside, a return to normal newsflow might dent the dollar’s current appeal, as investors refocus on Fed rate cut expectations.

Stronger data releases, like Wednesday’s impressive ISM Services PMI survey, might keep the dollar bid, but investors are still convinced that the one rate cut pencilled in by policymakers in the December 2025 dot plot is too cautious. On the flip side, with around 60bps of easing currently priced in for 2026, investors are currently more comfortable with weaker data prints and appear ready to sell the dollar.

Next week, the calendar is crammed with pivotal data, mostly focusing on inflation and the consumer side of the US economy. On Tuesday, the December CPI report will be in the spotlight, the first inflation print potentially not affected by the US government shutdown.

Another deceleration in price pressures, partly contradicting Fed members’ expectations for near-term inflation to remain elevated, as seen in the December 10 Fed meeting minutes, would potentially play into the hands of the new Fed Chair, potentially bringing forward the first 25bps rate cut currently priced in for mid-June. Notably, Trump has been mum on the name of Powell’s replacement.

On Wednesday, retail sales and producer price index data for November will be released, with the former giving significant insight into consumer spending appetite. A strong set of figures could beef up the current 2.7% growth forecast by the Atlanta Fed GDPNow model.

Meanwhile, after a relatively quiet period, Fedspeak is expected to intensify. The next Fed meeting is just 20 days away, which means that Fed members have to put their arguments across ahead of the usual blackout period. The focus will be on the more hawkish voting members, like Cleveland’s Hammack and Dallas’ Logan. Interestingly, the doves clearly have the upper hand this year in terms of the votes, adding to expectations for a persistently dovish Fed stance in 2026.

Most FX pairs are at the Dollar’s mercy

It has been a difficult start to the new year for peripheral currencies. Central bank rate expectations should be at the forefront, but, for now, dollar strength is dominating the moves. Apart from the Aussie, which is marginally gaining against the greenback, the remaining currencies are on the back foot at this stage versus the dollar, despite their respective central banks completing their easing cycles.

Specifically, developments with Venezuela could turn into a serious headache for Canada. A good part of Canada’s production is heavy oil, which is also the dominant product of Venezuela, further denting PM Carney’s bargaining power with President Trump, who is not the biggest fan of Canada.

Similarly, Australia is closely monitoring China’s newsflow. There is a renewed attempt by Chinese authorities to improve the situation on the ground by expediting investment plans and further allowing banks to address bad loans, in order to beef up their financial health and profitability. Notably, on Wednesday, Chinese trade balance data for December will be published, with investor attention on whether exports maintain their recent robust annual pace of increase and imports continue to grow, validating China’s efforts to prop up domestic demand.

Finally, the yen has been resisting the dollar’s strength, courtesy of the hawkish BoJ. Investors are trying to bring forward the next rate hike, currently priced in for September, but mixed data have been muddling the outlook. The BoJ will probably have to wait until the Shunto round, which realistically means that the April meeting is the key one for the next move. Until then, Japanese government officials will probably continue to verbally intervene to keep dollar/yen well below the ¥160, unless of course, the Fed surprises with a Q1 rate cut.

The year 2026 started eventful - but less so in economics, and more so in geopolitics. In our Geopolitical Radar: What's next after US assault on Venezuela? 9 January, we write how President Trump has already verbally attacked other countries in its neighbourhood, namely Mexico and Colombia. Furthermore, over the past week, the US administration has repeated its interest in making Greenland part of the US instead of it being a largely independent part of the Danish realm. Politically, that is of course a very important issue for Denmark, but not for economic reasons. Read more in our Flash Comment Denmark - Greenland has only limited impact of the Danish economy, 7 January.

As we write in our Geopolitical Radar, we think that the most likely next target of the US administration could be Iran's Islamic regime. The bombardment in June that targeted Iran's nuclear facilities resulted in only a temporary setback for Iran's nuclear program. As the US now has access to Venezuelan oil reserves, it might be less concerned with a potential Iranian retaliation that might disrupt oil trade in the Persian Gulf, and importantly, current anti-government protests in Iran could give the US-Israeli alliance a pretext to intervene.

Come what may, thus far markets have completely shrugged off events in Venezuela. Brent oil price is up only two dollars since the US attack, and futures curve is little changed as well. The limited reaction in the oil market is understandable. Despite of having the world's largest proved oil reserves, Venezuela's share of world oil supply is a mere 1%. Furthermore, Venezuelan oil is heavy and sour, making it more expensive to process. American refineries on the Gulf Coast are equipped to process such qualities, but the more relevant question is whether it makes economic sense to invest in Venezuela. According to estimates, the breakeven oil price for new projects in Venezuela is USD 80, and as there is already excess supply in the world market, prices are expected to stay much lower in the near future.

In the first weeks of 2026 it seems focus will most likely remain on geopolitics. Large economies remain on track and have been largely immune to geopolitical turbulence. Chinese and European exports have been robust despite facing higher tariffs in the US, and American businesses and consumers are only gradually starting to pay the price. In the coming two years, we expect economic growth close to trend levels in both the US and the euro area. We expect two more rate cuts from the Fed, while for the ECB, we foresee no rate changes in the forecast horizon.

Next week's economic calendar is almost empty. In Europe, we get the euro area Sentix indicator on Monday, showing the first estimate of investor confidence in 2026. On Thursday, the German statistics agency published the first full-year 2025 GDP estimate, thereby giving the first indication of Q4 GDP growth. In the UK, November GDP data is due on Thursday. In the US, the key data release of the week will be the December CPI. The previous November release was potentially distorted by data collection delays after the government shutdown, which might have caused Black Friday discounts to have an outsized negative impact on the data. Reversal of these effects is likely to lift December CPI, and we forecast above consensus prints.

Full report in PDF.