MNI EUROPEAN OPEN: Oil Down On Trump-Venezuela Headlines
EXECUTIVE SUMMARY
- TRUMP SAYS VENEZUELA TO TURN OVER 30 TO 50 MILLION BARRELS OF OIL TO US- RTRS
- TRUMP WON’T RULE OUT MILITARY FORCE TO ACQUIRE GREENLAND - BBG
- CHINA'S FUED WITH JAPAN WORSENS AS TOKYO SLAMS EXPORT CONTROLS - BBG
- AUSSIE CPI MODERATES OVER NOVEMBER TO 3.4% Y/Y - MNI BRIEF
Fig 1: Oil Benchmarks Resume Falls
Source: Bloomberg Finance L.P./MNI
UK
US (BBC): “The US may act to seize a Russian-flagged oil tanker heading across the Atlantic to Europe, CBS News, the BBC's media partner in the US, reported. Two US officials told the broadcaster that American forces plan to intercept the ship, which historically has carried Venezuelan crude oil and is thought to be between Scotland and Iceland.”
EU
TRADE (POLITICO): “European Commission President Ursula von der Leyen is determined to travel to South America next week to sign the EU's long-delayed trade pact with the Mercosur bloc, but she's having to make last-minute pledges to Europe's farmers in order to board that flight.”
UKRAINE (BBC): “The UK and France have signed a declaration of intent on deploying troops in Ukraine if a peace deal is made with Russia, UK Prime Minister Sir Keir Starmer has announced. After talks with Ukraine's allies in Paris, he said the UK and France would "establish military hubs across Ukraine" to deter future invasion, while French President Emmanuel Macron later said thousands of troops may be deployed.”
US
VENEZUELA/OIL (RTRS): “Venezuela will be "turning over" 30 to 50 million barrels of sanctioned oil to the United States, President Donald Trump said on Tuesday in the aftermath of the toppling of Nicolas Maduro who was seized from his country by U.S. forces over the weekend.”
VENEZUELA (BBG): "US President Donald Trump’s administration has told Venezuela’s interim leader, Delcy Rodríguez, that her government must exclusively partner with the US on oil production and favor the US when selling heavy crude, ABC reported."
GREENLAND (BBG): “President Donald Trump won’t rule out the use of military force to acquire Greenland, the White House said, ramping up tension with fellow NATO member Denmark over a dispute that’s surged back into public view following the ouster of Venezuelan strongman Nicolas Maduro.”
FED (MNI BRIEF): Three "insurance" interest rate cuts last year have left monetary policy within the range of the Federal Reserve's estimates of neutral and further moves will carefully balance both labor market and inflation goals, Richmond Fed President Tom Barkin said Tuesday.
POLITICS (RTRS): “U.S. President Donald Trump said on Tuesday that Republicans must win the 2026 congressional midterm elections - or else he will get impeached by Democrats.”
JAPAN
JAPAN/CHINA (BBG): "Tokyo protested China’s announcement of export controls on items destined for Japan that could have military uses, potentially impacting more than 40% of shipments by one estimate, the latest escalation in diplomatic tensions between the two Asian nations in a dispute related to Taiwan."
OTHER
AUSTRALIA (MNI BRIEF): Australia’s November CPI rose 3.4% year on year, down from 3.8% in October and 20 basis points below market expectations, while remaining flat on a month-on-month basis, Australian Bureau of Statistics data showed Wednesday.
OIL (BBG): " A small fleet of ships booked by Chevron Corp. is sailing to Venezuela as the company emerges as the only exporter of the country’s oil following the ouster of President Nicolas Maduro by US forces. "
CHINA
STOCKS (YICAI): “Beijing's policy drive to boost technology innovation amid economic restructuring and improved performance of listed companies are expected to prolong the latest A-share rally, Yicai.com reported citing analysts.”
ECONOMY (CCTV): “China's logistics industry prosperity index rose by 1.5 percentage points to 52.4% in December, hitting the highest level of the year, CCTV News reported citing data by China Federation of Logistics and Purchasing. “
MNI: PBOC Net Drains CNY500.2 Bln via OMO Wednesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY28.6 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY500.2 billion after offsetting maturities of CNY528.8 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.4423% at 09:34 am local time from the close of 1.4326% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 47 on Tuesday, the same as the close on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.0187 Weds; +4.70% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.0187 on Wednesday, compared with 7.0173 set on Tuesday. The fixing was estimated at 6.9849 by Bloomberg survey today.
MARKET DATA
AUSTRALIA NOV. CONSUMER PRICES UNCHANGED M/M; OCT. 0.0%
AUSTRALIA NOV. CONSUMER PRICES +3.4% Y/Y; EST. +3.6%; OCT. +3.8%
AUSTRALIA NOV. TRIMMED MEAN CPI +0.3% M/M; OCT. +0.3%
AUSTRALIA NOV. TRIMMED MEAN CPI +3.2% Y/Y; EST. +3.2%; OCT. 3.3%
AUSTRALIA NOV. BUILDING APPROVALS +15.2% M/M; EST. 2.0%; OCT. -6.1%
AUSTRALIA NOV. PRIVATE HOUSE APPROVALS +1.3% M/M; OCT. -1.3%
JAPAN S&P GLOBAL DEC. SERVICES PMI 51.6; PRE. 52.5; NOV. 53.2
JAPAN S&P GLOBAL DEC. COMPOSITE PMI 51.1; PRE. 51.5; NOV. 52.0
MARKETS
US TSYS: Yields Grind Lower on Mixed Day for Equities
US treasury futures remain up in Wednesday trade across all maturities. The US 10-Yr is up +03+ at 112-13+. The rally for TYH6 takes it near to the 100-day EMA of 112-14+ which it traded below at the start of trading this week.
Cash is seeing lower yields with longer bonds outperforming ahead of a big data release tonight.
- The 2-yr is flat at 3.465%
- The 5-yr is at 3.71% - down -0.5bps
- The 10-yr is at 4.165% - down 1bps
- The 30-yr is at 4.854% - down 1.2bps.
Tonight markets will focus on the ADP Employment change, ISM Services and JOLT Job openings, Factor Orders and Durable Goods orders. For the ADP, forecasts are for +50k in December, from -32k prior. Other key data out will be the ISM Services Index which is forecast to moderate to 52.2 from 52.6 in November. JOLT job openings is forecast at 7648k for December, from 7670 in November. Factory and Durable goods orders are both forecast to contract.
Tonight sees a US$69bn 17-week bill auction. Last 17-week auction had a bid to cover of 3.11x
JGBS: Twist-Steepener Ahead Of Tomorrow's 30Y Supply
JGB futures are stronger, +16 compared to settlement levels, but off session bests.
- Cash US tsys are flat to 1bp richer, with a flattening bias, in today's Asia-Pac session. US ADP private employment & JOLTS data today, NFP Friday.
- (Bloomberg) “JGB traders continue to be aggressive sellers of bonds in the mid-section of the curve when the BOJ comes calling at Rinban operations. The selling ratio rose today to 3.11 in the three-to-five year sector, up from 2.37 at the previous round.”
- Nevertheless, the cash JGB curve has twist-steepened across benchmarks, with yields 1.3–1.7bps lower in the 3–5-year sector and around 2.5bps higher at the 40-year point, ahead of tomorrow’s long-end supply.
- The benchmark 10-year yield is 0.9bp lower at 2.120% versus the cycle high of 2.134% (see chart).
- The 10-year JGB auction yesterday delivered weakish results, with the low price failing to meet expectations at 100.00, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 3.3037x from 3.5913x.
- Swap rates are 1bp lower to 1bp higher, with a steeper curve.
- Tomorrow, the local calendar will see Cash Earnings, Tokyo Avg Office Vacancies, Consumer Confidence and Weekly International Investment Flows alongside 30-year supply.
Source: Bloomberg Finance LP
AUSSIE BONDS: Slightly Richer Post-CPI, Mixed On The Day
ACGBs (YM -1.0 & XM +2.0) are 2-3bps stronger versus pre-CPI levels, but well off post-date highs.
- November trimmed mean CPI inflation moderated 0.1pp to 3.2% y/y in line with consensus, while headline fell more than expected at 3.4% after 3.8%. The complete monthly series is new with little track record and so the RBA will focus on the quarterly data for now with Q4 printing on 28 January.
- Cash US tsys are flat to 1bp richer, with a flattening bias, in today's Asia-Pac session. US ADP private employment & JOLTS data today, NFP Friday.
- Cash ACGBs are flat to 2bps richer with the AU-US 10-year yield differential at +59bps.
- The bills strip is -2 to -4 across contracts.
- RBA-dated OIS is slightly firmer versus pre-CPI levels. The pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 41% for February to 121% by June and 189% by December 2026.
- TCV A$ Nov 2037 Benchmark Bond Tap, 10Y EFP+88-90bp Area
- Tomorrow, the local calendar sees Trade balance data for November.
Figure 1: RBA-Dated OIS – Current
Source: Bloomberg Finance LP / MNI
BONDS: NZGBS: Bull-Flattener But Swap Curve Remains At Highs
NZGBs closed showing a bull-flattening, with benchmark yields flat to 2bps.
- NZ-US and NZ-AU 10-year yield closed unchanged at +33bps and -28bps.
- Cash US tsys are flat to 1bp richer, with a flattening bias, in today's Asia-Pac session. US ADP private employment & JOLTS data today, NFP Friday.
- NZ swap rates are flat to 3bps, with a flatter curve. Nevertheless, the 2s10s curve remains near cycle highs, the steepest since 2021.
- RBNZ-dated OIS pricing is little changed across meetings. No tightening is priced for February, while October 2026 assigns 20bps.
- The local data calendar is very light this week. Next week we get Nov filled jobs, along with food prices as well.
Bloomberg Finance LP
FOREX: A$ Gains The Standout, AUD/NZD At Fresh Cycle Highs, Steady Elsewhere
Outside of AUD gains, the price action in the G10 has been very muted so far today. The USD BBDXY index sits little changed near 1205.10 in latest dealings. The A$ sits up 0.35% to 0.6760/65, fresh highs back to 2024. We saw a brief dip to 0.6717 post a slightly softer Nov CPI read, but this was well supported. We are just above the Oct 11 2024 high of 0.6759, with the 0.6800 region now likely to come into focus. AU rates, particularly at the front end, were also supported from a yield stand point. RBA tightening expectations for 2026 sit slightly firmer versus pre CPI levels. Outside of rate expectations, the metals commodity backdrop is also aiding the AUD, with iron ore gains notable today.
- Shifts elsewhere in the G10 space are less than 0.1% at this stage. NZD/USD is little changed, last 0.5780/85, while USD/JPY is just under 156.60. EUR/USD is up a touch but still under 1.1700 at this stage.
- The AUD/NZD cross is trending towards 1.1700, fresh highs back to 2013. AUD/JPY is near 105.90, fresh highs back to mid 2024.
- We are seeing softer gold and silver trends so far today, but the BBG metals spot sub index is up 16% since late Nov lows. Iron ore is above $108.50/ton per the active SGX contract.
- Later on Wednesday US December ADP employment prints and is forecast to rise 50k after falling 32k in November. There are also November JOLTS job openings, December ISM services and final October orders. The Fed’s Bowman speaks on banking regulation.
ASIA STOCKS: Mixed Day for Stocks, KOSPI Remains Overbought on RSI
A mixed day across Asia with profit taking driving key markets as they back away from near term highs. A mixed day for key AI / Tech stocks with Taiwan's TSMC - 1.7%, Korea's AI /Tech names have had a strong rally with Samsung Electronics +1.6%, +3.3%, Whilst Japan's Softbank fell -1.5%. The weakness in oil has had a limited impacted with some energy linked companies like Petronas in Malaysia up 1% today. There is growing recognition from markets of the stretched valuations for the tech sector, a risk that will continue in the background for now whilst the euphoria continues.
- The NIKKEI has had its first fall of the year, down -1.2% today whilst remaining up over 3% in the first three trading days, reaching a new high of 52,518 yesterday.
- The KOSPI is flat today despite the bounce back from the AI Tech names despite growing concerns over their valuations. The KOSPI maintains its position of overbought on the 14-day relative strength index, likely feeding into the the lacklustre performance today.
- China's bourses are mixed today with the Hang Seng following the lead from Japan and Korea with falls of -1.2%, dragging the CSI 300 down -0.22% with it. Onshore bourses have fared better with Shanghai up +0.15% and Shenzhen +0.21%
- SE Asia's major bourses were stable with SE Thai and FTSE Malay flat and the JCI in Indonesia up by a modest +0.14%
- India's NIFTY 50 continues to moderate down -.20% at early Wednesday for its third day of falls. Having reached new highs Friday of 26,328 it has fallen -0.60% in subsequent trading days.
OIL: Crude Continues Selling Off As Venezuelan Oil To Flow To US
Oil has faced further downward pressure today after US data showed large product inventory builds and President Trump announced Venezuela will ship “between 30 and 50 MILLION barrels of High Quality Sanctioned Oil” to the US. Both events added to ongoing concerns over a global supply glut pushing prices down further after Tuesday’s 2% decline. In addition, the discussion of security guarantees Tuesday may have brought a Ukraine deal closer.
- WTI is down 1.6% today to $56.24 after falling to $55.76 following Trump’s Truth Social post but holding above initial support at $54.89. Brent is 1.1% lower at $60.02 with the break below $60 short-lived. While technicals signal a dominant downtrend, it is holding above support at $58.53.
- Chevron & Quantum are set to bid for Lukoil’s assets after US imposed sanctions on Russia’s oil majors, according to the FT.
- Without a timeframe it is difficult to understand how Venezuela will be able to send 30-50mn barrels of oil to the US. The IEA reported that it produced only 860 kbd in November 2025 down from around 1mbd earlier.
- It is reported that Chevron, who still has operations in Venezuela, has sent 11 tankers to begin transporting oil to the US. Gulf refineries are geared to refine heavy, sour crude of the type that Venezuela produces.
- Bloomberg reported that there was a 2.8mn barrel US oil inventory drawdown last week, according to people familiar with the API data. Gasoline inventories rose 4.4mn and distillate 4.9mn. The official EIA data is out Wednesday.
- Later on Wednesday US December ADP employment, November JOLTS job openings, December ISM services and final October orders print. The Fed’s Bowman speaks on banking regulation. In Europe, preliminary December euro area CPI and November German unemployment & retail sales are released.
PRECIOUS METALS: Gold & Silver Lower Ahead Of The Week’s US Jobs Data
After rallying on Tuesday as geopolitical risks drove safe haven flows, gold & silver are lower in Wednesday’s APAC session. Precious metals appear to be steadying ahead of this week’s US jobs data, which finishes with payrolls on Friday and is likely to influence Fed easing expectations. Also the discussion of security guarantees Tuesday may have brought a Ukraine deal closer. US yields are little changed while the US dollar is down slightly.
- Gold is down 0.6% to $4465.5/oz after falling to $4459.92. It approached the 26 December record high at $4549.92 on Tuesday, which is the bull trigger. Any sell off is still corrective for now.
- Silver is 1.9% lower at $79.78/oz, close to the intraday low. It rose to $82.754 early in trading below the 28 December record at $84.0075, which is also the bull trigger. It remains in an uptrend but is also in overbought territory.
- Precious metals will be watching this week’s US labour market data closely given OIS pricing seems unsure if there will be another Fed rate cut in Q1 with a full 25bp not priced in before June.
- Later on Wednesday US December ADP employment prints and is forecast to rise 50k after falling 32k in November. There are also November JOLTS job openings, December ISM services and final October orders. The Fed’s Bowman speaks on banking regulation.
- Equities are mixed with the S&P e-mini is slightly lower, the CSI is flat and Hang Seng down 1.0%. Oil continues to sell off with WTI -1.5% to $56.26/bbl. Copper is down 1.1%.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 07/01/2026 | 0700/0800 | ** |  DE | Retail Sales |
| 07/01/2026 | 0745/0845 | ** |  FR | Consumer Sentiment |
| 07/01/2026 | 0830/0930 | ** |  EU | S&P Global Final Eurozone Construction PMI |
| 07/01/2026 | 0855/0955 | ** | DE | Unemployment |
| 07/01/2026 | 0900/1000 | *** | DE | Bavaria CPI |
| 07/01/2026 | 0900/1000 | *** | DE | Baden Wuerttemberg CPI |
| 07/01/2026 | 0930/0930 | ** |  GB | S&P Global/CIPS Construction PMI |
| 07/01/2026 | 1000/1100 | *** | EU | EZ HICP Flash |
| 07/01/2026 | 1000/1100 | *** | EU | EZ HICP Flash |
| 07/01/2026 | 1000/1100 | *** | EU | EZ HICP Flash |
| 07/01/2026 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 07/01/2026 | 1000/1100 | *** | EU | EZ HICP Flash (2dp) |
| 07/01/2026 | 1000/1100 | *** |  IT | Italy Flash Inflation |
| 07/01/2026 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 07/01/2026 | 1315/0815 | *** | US | ADP Employment Report |
| 07/01/2026 | 1500/1000 | *** | US | ISM Non-Manufacturing Index |
| 07/01/2026 | 1500/1000 | ** | US | Factory New Orders |
| 07/01/2026 | 1500/1000 | ** | US | Factory New Orders |
| 07/01/2026 | 1500/1000 | *** | US | JOLTS jobs opening level |
| 07/01/2026 | 1500/1000 | *** | US | JOLTS quits Rate |
| 07/01/2026 | 1500/1000 | * |  CA | Ivey PMI |
| 07/01/2026 | 1530/1030 | ** | US | US DOE Petroleum Supply |
| 07/01/2026 | 1530/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 07/01/2026 | 2110/1610 | US | Fed Vice Chair Michelle Bowman | |
| 08/01/2026 | 2330/0830 | ** |  JP | average wages (p) |
| 08/01/2026 | 0030/1130 | ** |  AU | Trade Balance |
| 08/01/2026 | 0700/0800 | ** | DE | Manufacturing Orders |
| 08/01/2026 | 0700/0800 | *** |  SE | Flash Inflation Report |
| 08/01/2026 | 0700/0800 | *** | SE | Flash Inflation Report |
| 08/01/2026 | 0730/0830 | *** |  CH | CPI |
| 08/01/2026 | 0745/0845 | * | FR | Foreign Trade |
| 08/01/2026 | 0830/0930 | EU | ECB de Guindos Fireside Chat at Next Spain | |
| 08/01/2026 | 0900/1000 | ** | EU | ECB Consumer Expectations Survey |
| 08/01/2026 | 0930/0930 | GB | BOE Decision Maker Panel data | |
| 08/01/2026 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 08/01/2026 | 1000/1100 | ** | EU | EZ PPI |
| 08/01/2026 | 1000/1100 | ** | EU | EZ Unemployment |
| 08/01/2026 | 1330/0830 | *** | US | Jobless Claims |
| 08/01/2026 | 1330/0830 | ** | CA | International Merchandise Trade (Trade Balance) |
| 08/01/2026 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 08/01/2026 | 1330/0830 | ** | US | Trade Balance |
| 08/01/2026 | 1330/0830 | ** | US | Trade Balance |
| 08/01/2026 | 1330/0830 | ** | CA | International Merchandise Trade (Trade Balance) |
| 08/01/2026 | 1330/0830 | ** | US | Preliminary Non-Farm Productivity |
