According to MUFG FX analyst Lee Hardman, the US Dollar (USD) has begun the new year with significant momentum. The Dollar Index (DXY) is poised for its fourth straight daily gain, having touched an overnight high of 98.796.
The primary weekend development was the Trump administration’s decisive move to force regime change in Venezuela by ousting President Nicolas Maduro. Hardman notes, however, that the initial market reaction has been subdued.
Investors are closely monitoring oil prices to gauge potential spill-over effects into broader financial markets. Brent crude is hovering near $60 a barrel, having dipped slightly overnight. This suggests market relief that immediate supply disruptions are unlikely. Due to decades of economic mismanagement, Venezuela’s role in global oil supply has diminished; it is currently only the 18th largest producer, supplying about 1 million barrels per day (1% of the global total), compared to 3.5 million in the 1970s.
Despite this, there is optimism that a successful regime change could unlock Venezuela’s vast, untapped potential—the country claims the world’s largest proven oil reserves, though they are expensive to extract—and eventually boost global supply.
The outcome of the regime change remains uncertain. Acting President Delcy Rodriguez invited the US to cooperate within international law. This followed a severe warning from President Trump, who is demanding “total access” to oil resources for rebuilding, stating that Rodriguez would “pay a very big price” if she fails to comply.