The past week in financial markets was particularly significant, as it included the final days of 2025 and the first days of 2026 — a combination that helped shape trends likely to influence both years. In this weekly report, we highlight the key developments that closed out 2025 and those that marked the start of the new year.

While the year ended quietly, with investors confident about the outperformance of certain assets and the decline of others, the new year began with considerable turbulence. Important economic data was released, alongside a global shock over the weekend after President Donald Trump announced that US forces had carried out a strike in Venezuela and arrested President Nicolás Maduro and his wife.

These events are expected to be the most influential drivers for markets when trading resumes on Monday morning at the start of a new week.

The US Dollar in 2025

The US dollar ended last week with strong gains, supported by several factors that fueled its upward momentum through Friday. On an annual basis, however, the dollar index declined due to multiple influences, including several interest‑rate cuts by the Federal Reserve throughout the year.

The currency was also affected by political factors, such as the tariffs imposed by President Donald Trump on imports from most of the United States’ major trading partners.

The Fed’s messaging — accompanying three rate cuts between September and December — played a major role in shaping the dollar’s performance. Chair Jerome Powell repeatedly emphasized that inflation was moving in the right direction and approaching the central bank’s target.

The Fed also signaled on several occasions that further rate cuts were likely, citing pronounced weakness in the US labor market throughout the year.

However, on a weekly basis, the dollar received strong support from the Fed’s latest meeting minutes, which contained hawkish signals suggesting the central bank may keep rates unchanged in the near term. Traders interpreted this as a sign that the Fed may pause its rate‑cutting cycle, helping the dollar secure weekly gains.

Positive US data also contributed significantly to the dollar’s strength last week. Weekly jobless claims fell by 16,000 to 199,000 — far better than expectations of an increase to 218,000 — reflecting resilience in the labor market.

The dollar also benefited from rising home prices, as shown in the S&P/Case‑Shiller 20‑City Composite Index, which rose 0.3% month‑on‑month and 1.3% year‑on‑year, beating forecasts of 0.1% and 1.1% respectively.

Additionally, the Chicago PMI climbed to 43.5, an increase of 9.2 points from the previous month, surpassing market expectations of 40. These figures strengthened confidence in the US economy and boosted demand for the dollar.

Gold in 2025

Despite gaining more than 70% over the course of 2025, gold recorded weekly losses due to the dollar’s strength. The metal’s decline last week was driven by the stronger dollar, supported by the Fed’s meeting minutes and upbeat economic data.

The minutes showed a clear inclination to keep interest rates unchanged and pause further cuts for the time being.

On an annual basis, gold’s impressive rise — exceeding 70% — was fueled by several key factors:

• Increased sovereign demand from central banks
• Three Fed rate cuts during 2025
• Political developments in the US, including Trump’s tariffs and the government shutdown
• Strong inflows into gold‑backed ETFs seeking to capitalize on the metal’s exceptional rally

Wall Street Stocks

US equities ended last week in negative territory, weighed down by several factors that bullish investors believe could reduce the likelihood of interest‑rate cuts in the coming period. The Federal Reserve’s meeting minutes leaned toward quantitative tightening, after the Federal Open Market Committee included language in its December statement warning that inflation could rise to unsafe levels, according to minutes released last Wednesday.

The minutes from the December 9–10 Fed meeting revealed a clear division over cutting interest rates. The committee approved a 25‑basis‑point cut by a vote of 9–3 — the largest dissent since 2019 — bringing the new target range to 3.50%–3.75%. Most members believed further cuts would be appropriate if inflation continued to decline, while others warned against moving too quickly and preferred holding rates steady after this cut.

Although the Fed expects the economy to grow at a moderate pace, it highlighted risks to employment and the possibility of inflation re‑accelerating, which made the vote more balanced. The minutes also noted that some members who supported the cut were equally prepared to support keeping rates unchanged.

The Dot Plot — the committee’s official projection tool — indicated the possibility of another rate cut in 2026 and a further cut in 2027, bringing the policy rate down to 3.00%, which the Fed considers a neutral level. However, dissenting members expressed concern about the slowing progress toward the Fed’s 2.00% inflation target.

The Fed also noted that Trump’s tariffs temporarily pushed inflation higher, with the impact expected to fade in 2026 — another signal of a tilt toward tightening and keeping rates unchanged for now.

Subsequent data showed a slowdown in hiring without an increase in layoffs, while inflation continues to ease but remains above target. Meanwhile, the broader economy posted strong growth of 4.3% in the third quarter, despite delays in some data releases caused by the government shutdown.

Markets now expect the Fed to hold rates steady in upcoming meetings, especially given the absence of official commentary during the holiday period.

The committee also voted to resume bond purchases — $40 billion per month in short‑term Treasuries — to ease funding‑market pressures. However, it stressed that these purchases serve a balance‑sheet management purpose, not a return to quantitative easing.

Economic data released last week also contributed to the decline in US equities, as improving labor‑market indicators reduced the urgency for rate cuts. Seasonal factors also played a role, including lower market liquidity as many investors stepped away for the Christmas holidays and closed significant trading positions.

Additionally, annual portfolio rebalancing by investment funds — aimed at diversifying holdings and adjusting asset sizes — added further pressure on stock performance.

Oil and Venezuela Tensions

Oil prices fell last week due to the strong US dollar and a build‑up in US inventories, although geopolitical risks, strong Chinese demand, and the OPEC+ production freeze helped limit the losses. The market now appears to be entering a period of fragile balance between supply pressures and support from global demand.

Crude prices saw mixed movements on Tuesday: WTI February futures slipped 0.3%, while gasoline futures rose around 0.4%. The decline followed a rise in the US dollar index to its highest level in a week, which weighed on dollar‑denominated commodities.

Oil also came under pressure after US inventory data showed an unexpected increase of 405,000 barrels in crude stocks, compared with expectations of a 2‑million‑barrel draw. Gasoline inventories rose 2.86 million barrels, far above forecasts of 1.1 million, and stocks at Cushing storage hub climbed by 707,000 barrels, adding further downward pressure.

Despite the decline, several factors helped limit losses, including ongoing tensions in Venezuela, Nigeria, and Russia, as well as recent US strikes on ISIS targets in Nigeria.

Sources within OPEC+ confirmed that the group will stick to its plan to freeze production increases during the first quarter of 2026, in an effort to stabilize the market amid expectations of a record global surplus of 4 million barrels per day.

Data from Kpler indicated that China’s crude imports are set to rise 10% month‑on‑month to a record 12.2 million barrels per day, as the country rebuilds its inventories.

Adding to market volatility was the US special‑forces operation in Venezuela, which resulted in the arrest of President Nicolás Maduro — an event expected to trigger sharp price spikes when markets reopen in the new week.

Footage published by US media on Sunday, 4 January, showed Maduro in a New York detention facility following the elite US military operation in Caracas, during which he and his wife were captured and transferred to the United States.

The operation, carried out before dawn on Saturday (local time), sparked widespread debate over the legality of US actions and their compliance with international law.

President Donald Trump defended the operation in a press conference, stressing its legality and stating that Washington would “temporarily administer Venezuela to ensure a safe transition of power.” He also noted that US oil companies would be able to return to Venezuela and invest in its energy sector.

The US administration accuses Maduro and his government of involvement in drug‑trafficking activities targeting the United States, and Trump has accused Venezuela of “stealing American oil.”

While Trump’s supporters welcomed the announcement of Maduro’s arrest, prominent Democratic lawmakers criticized the president’s actions, arguing that he overstepped constitutional limits by launching a military operation abroad without prior approval from Congress.

The Week Ahead

Markets are bracing for several important developments in the new week, most notably the evolving situation in Venezuela, which is expected to have a significant impact on oil and gold prices.

Over the coming days, the U.S. will release key employment data, beginning with preliminary indicators, followed on Friday by the non‑farm payrolls report, which tracks job growth, along with wage growth figures, unemployment metrics, and productivity data.

Earnings reports from several companies listed on major global stock indices will also be released this week, and these results are expected to have a meaningful influence on price movements in equity markets.