This year, 2026, opened with a cascade of United States (US)-related geopolitical developments that are reshaping risk sentiment across global markets. From military action in Venezuela to escalating tensions with Iran, territorial disputes over Greenland, and what seems to be an unprecedented attack on US Federal Reserve (Fed) independence, traders face a complex backdrop. This week we unpack each development and assess implications for the rand and broader emerging market currencies.
US military intervention in Venezuela
The Trump administration ordered an invasion of Venezuela on 3 January, capturing President Nicolás Maduro and fundamentally altering the political landscape in South America. US forces struck targets including the main Venezuelan military base before extracting Maduro, who now faces narco-terrorism charges stemming from a 2020 US Department of Justice indictment.
Venezuelan Vice President, Delcy Rodríguez, has been installed as interim leader via a Venezuelan Supreme Court ruling. The Trump administration has indicated that it intends to “run” the country remotely, using economic leverage and the threat of further military action to extract concessions. Trump announced that Venezuela would transfer 30 million to 50 million barrels of sanctioned oil to the US, valued at approximately $2 billion to $3 billion.
Despite Maduro’s removal, all US sanctions on Venezuela remain in force, including prohibitions on transactions between the Venezuelan government and Petróleos de Venezuela, S.A., the state-owned oil and gas company of Venezuela and the global oil sector. US oil giant, Chevron, has indicated plans to increase production by 50% over the next 18 to 24 months, though ExxonMobil’s CEO called the country “uninvestable” if there are no security guarantees.
The intervention also has broader implications for Iran-Venezuela economic ties, including the two countries’ shared shadow fleet operations. The US intercepted Venezuela’s Bella 1 tanker in January 2026 with the United Kingdom’s (UK’s) support, disrupting sanctioned oil flows between the two countries.
Iran: protests, crackdown, and US military posturing
Iran is experiencing its most severe domestic unrest since the 1979 revolution. Protests that began on 28 December 2025 over economic grievances – including the Iranian rial’s collapse to over 1.4 million to the US dollar – have evolved into widespread calls for regime change. Human rights organisations estimate that the uprising’s death toll exceeds 2,500, with some reports suggesting that as many as 12,000 people were killed in two nights of violent government crackdowns on 8 and 9 January.
President Trump has repeatedly threatened military intervention if the Iranian government continues lethal force against protesters, stating on Truth Social that “help is on the way.” The US has begun evacuating personnel from Al Udeid Air Base in Qatar – home to approximately 10,000 troops and a strategic headquarter for US Central Command – in anticipation of potential Iranian retaliation.
Tehran has warned regional neighbours including Saudi Arabia, the United Arab Emirates, and Türkiye that US bases in their territories would be targeted in the event of American strikes. European allies have imposed additional sanctions, with G7 foreign ministers warning of “additional restrictive measures” if the crackdown continues. Iranian Foreign Minister, Abbas Araghchi, has reached out to US Special Envoy, Steve Witkoff, to discuss potential negotiations, though there are no indications that Iran has softened its stance on uranium enrichment or support for regional militias.
Greenland: territorial ambitions escalate
US President, Donald Trump’s stated intention to annex Greenland has intensified following the Venezuela operation. Trump has declared that “anything less” than US control of the Danish territory is “unacceptable”, threatening to pursue it the “hard way”, if negotiations fail. White House officials have discussed payments of $10,000 to $100,000 to each of Greenland’s 56,000 residents to influence a potential referendum on Greenland’s independence.
Danish Foreign Minister, Lars Løkke Rasmussen, and Greenlandic Foreign Minister, Vivian Motzfeldt, met with US Secretary of State, Marco Rubio, and US Vice President, JD Vance, in Washington on Wednesday. Rasmussen stated bluntly that the meetings “didn’t manage to change the American position,” acknowledging that “the President has this wish of conquering over Greenland.” A working group has been established to continue discussions.
European allies have responded with a show of solidarity for Denmark. Denmark has increased its military presence in Greenland, while Sweden, Germany, and other NATO members have deployed reconnaissance teams and personnel ahead of a planned “Operation Arctic Endurance” exercise. United Nations (UN) human rights experts have warned that any attempt to modify Greenland’s territorial status would violate international law and undermine regional stability. President Trump has cited the “Golden Dome” missile defence programme and the threat of Russian and Chinese encroachment as justifications. Danish officials, however, have disputed the assertion they cannot adequately secure the territory.
Federal Reserve independence under attack
The US Justice Department served the Fed with grand jury subpoenas on Friday, threatening the criminal indictment of Fed Chair, Jerome Powell, over his June 2025 congressional testimony regarding the $2.5 billion Fed-headquarters renovation project. Powell responded with an extraordinary video statement Sunday evening, framing the investigation as a pretext for the administration’s campaign to influence interest rate decisions.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell stated. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation,” he added.
Republican Senator, Thom Tillis, has pledged to block any Trump nominees to the Fed until the investigation is resolved. Powell’s term as Chair ends in May, but his governor seat runs until 2028. Adding to the furore, the Supreme Court will hear arguments on 21 January regarding Trump’s attempt to fire Fed Governor, Lisa Cook, a case that could fundamentally reshape executive authority over the US central bank.
Market implications
US dollar and Treasuries: The Powell investigation triggered an immediate “Sell America” trade reminiscent of 2 April 2025’s tariff shock. The dollar weakened against major currencies including the Swiss franc and Japanese yen, while US Treasury yields rose and the curve steepened. Bond investors fear that compromised Fed independence could lead to less vigilant inflation control. Former Fed chairs, Ben Bernanke, Alan Greenspan, and Janet Yellen, have condemned the probe as an “unprecedented attempt” to undermine central bank independence.
Precious metals: There was renewed interest from speculators in the precious metal space as they took advantage of the above-mentioned events with gold getting pushed above the $4,600/ounce level and silver getting even more attention with a push towards $92/ounce.
Equities: US equities initially sold off sharply, with Dow futures down nearly 500 points and the Nasdaq leading declines given its sensitivity to interest rate expectations. However, markets recovered by Monday’s close, with the Dow and S&P 500 posting modest gains at record highs. Analysts at independent investment banking advisory firm, Evercore ISI, warn the “Sell America” trade may gather pace, with risks around the independence of the Fed remaining a key theme. The volatility index (VIX) rose but did not break out of its recent range, suggesting investors remain uncertain on whether this will become a prolonged narrative.
Energy markets: Oil markets face crosscurrents. The Venezuelan intervention theoretically unlocks significant supply – Chevron aims to boost production 50% over 18 to 24 months – despite sanctions remaining in place and the country’s persistent security concerns. On the other hand, any US military action against Iran will immediately threaten Gulf shipping and potentially remove Iranian barrels from global supply. As such, Brent and West Texas Intermediate are expected to move significantly on any Iran headlines.
Emerging market FX and the rand: The confluence of these developments creates a challenging environment for high-beta emerging market currencies. Risk-off sentiment typically weighs on the rand, yet the dollar’s vulnerability to concerns of Fed independence provides a counterbalance. The gold rally directly supports the rand through its correlation with South African mining exports and improved terms of trade. Emerging Market (EM) currencies, with exposure to Gulf volatility – including the Turkish lira and Egyptian pound – face elevated risk should Iran tensions escalate. Latin American currencies may also see heightened volatility as markets digest implications of US willingness to use military force in the region.
A LOOK AT THE WEEK’S MARKETS
The week’s key themes:
- US Treasury yields pushed to four-month high as data supports patience by the Fed
- TSMC’s upbeat fourth-quarter results drives tech optimism
- Oil dips 4% as Iran tension eases, while metals blow off steam after reaching record highs
- Dollar set for third weekly gain on expectations of a conservative Fed stance
Bonds
US Treasury yields pushed higher on Thursday, with the 10-year note trading around 4.16%, near its four-month high of 4.20%. Weekly US jobless claims came in well below estimates, reinforcing US labour market resilience and reducing pressure on the Fed to cut rates quickly. President Trump also directed the government sponsored enterprises, Freddie Mac (Federal Home Loan Mortgage Corporation) and Fannie Mae (Federal National Mortgage Association), to purchase $200 billion of mortgage-backed securities by next week, potentially supporting longer-dated fixed income.
In the UK, the 10-year gilt yield climbed to 4.37% as investors trimmed Bank of England (BoE) rate cut expectations after UK gross domestic product (GDP) surprised to the upside – rising 0.3% in November versus forecasts of 0.1%. Markets now imply roughly 46 basis points of easing by year-end, with a first cut still fully priced in by June.
Germany’s 10-year Bund yield rose to 2.83% after data showed German GDP grew 0.2% in 2025, ending a two-year contraction. With eurozone inflation at target, markets expect the European Central Bank (ECB) to hold rates steady through 2026.
South Africa’s 10-year yield held below 8.30% – its lowest level since January 2020 – supported by improved fiscal outcomes, slower inflation (3.5% in November), repo-rate cuts, and a firmer rand. The headline Consumer Price Index now sits closer to the South African Reserve Bank’s revised 3% target, keeping the door open for further easing this year.
Global equities
US equity futures were steady on Friday, after a strong Thursday session. The Dow rose 0.6%, while the S&P 500 and Nasdaq edged up around 0.25%, ending a two-session slide. Chipmakers led gains after Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest dedicated independent semiconductor foundry, rallied 4.4% on upbeat fourth quarter results and higher 2026 capital expenditure plans, reinforcing the AI-demand narrative. US chip manufacturer, Nvidia, gained 2.1%, global tech materials supplier, Applied Materials, jumped 5.6%, and global technology giant, Broadcom, added 0.9%. Financials also rebounded – Goldman Sachs climbed 4.6% and Morgan Stanley surged 5.8%. Geopolitical risks around Iran and Greenland are keeping sentiment cautious.
The FTSE 100 advanced 0.6% to a record close of 10,241, led by banks, after UK GDP beat expectations. Multinational asset management firm, Schroders, jumped over 9% on better-than-expected profit guidance, while miners also contributed to gains.
European equities hit record levels, with the Euro STOXX 50 up 0.7%. Suppliers to the global semiconductor sector, ASML and ASM climbed 6% and 11%, respectively, on TSMC’s strong results, while luxury goods brand, Richemont, slipped 2.4% post-earnings.
The JSE All Share extended its record run to 121,284 points, up roughly 46% over the past year. Precious metals, telecoms, and basic materials have led sector performance, with sentiment supported by South Africa’s improved fiscal outlook and its removal off the Financial Action Task Force’s grey-list.
Commodities
Brent crude steadied near $63.8/barrel this morning after sliding more than 4% the previous session as traders pared back the Iran “war-risk premium.” The pullback followed President Trump dialling down earlier rhetoric, with reports suggesting Israel and regional partners urged Washington to delay any strike over retaliation concerns. Despite the sell-off, Brent is tracking a modest weekly gain after earlier support from Iranian unrest, Venezuelan political turbulence, and Kazakhstan export disruptions.
Gold has eased toward $4,600/ounce as safe-haven demand cooled and rate-cut expectations were pushed out. Firmer US data prompted markets to trim near-term easing bets, with the next fully priced in Fed rate cut shifting from June to July. Bullion remains up over 2% for the week, holding near record territory.
Silver has slipped below $90/ounce after the US opted not to proceed with tariffs on critical minerals, sparking profit-taking. The metal is still heading for a weekly gain of more than 13%, supported by precious-metals demand amid geopolitical uncertainty.
Copper has retreated to around $5.95/pound, stepping off record highs after Trump signalled a preference for negotiated supply arrangements over immediate tariffs. The market continues to draw support from tightening exchange stocks and structural demand tied to electrification and AI infrastructure.
Currencies
The US Dollar Index is hovering near 99.3 this morning, on course for its third straight weekly gain after firm US data cooled Fed rate-cut expectations. US weekly jobless claims undershot forecasts, reinforcing labour-market resilience, while Fed officials warned inflation risks remain. On trade, the US agreed to trim tariffs on Taiwanese goods to 15%, while Taiwanese firms pledged $250 billion to expand US chipmaking capacity.
The euro has slipped to $1.163/€ – its weakest level in over a month – as divergence in European Union’s members’ policy widens. Germany’s economy grew 0.2% in 2025, ending a two-year contraction, which is aiding the euro. While eurozone inflation eased to the ECB’s 2% target, ECB Governing Council Member and Governor of the Bank of France, Villeroy de Galhau, dismissed talk of a 2026 rate hike as “fanciful.”
Sterling has stabilised near $1.34/£ after UK GDP rose 0.3% in November, beating expectations. Markets now imply about 46 basis points of BoE easing by year-end, with a first cut fully priced in by June.
The rand is trading around R16.40/$, supported by elevated gold prices and domestic reform momentum. The currency gained over 10% in 2025 – its best performance since 2009 – underpinned by improved fiscal management, contained inflation, and relative political stability.
*Please note that all information is at the time of writing.
Key indicators:
USD/ZAR: 16.34
EUR/ZAR: 18.97
GBP/ZAR: 21.87
GOLD: $4605.45
BRENT CRUDE: $63.85
Sources: Bloomberg, Investing.com, Reuters, Trading Economics and Trading View.
Written by: Citadel Advisory Partner and Citadel Global Director, Bianca Botes.