North American Summary and Highlights 21 Dec

North American session
The USD lost ground into the US data, which helped extend USD losses though only modestly. Most notable was a downward revision to core PCE prices though dips in UST yields on the data were not sustained. EUR/USD advanced to 1.10 and GBP/USD came close to 1.27. USD/JPY fell to near 142, AUD/USD reached 0.68 while USD/CAD fell below 1.33. 
Initial claims at 205k from 203k remain low in the survey week for December’s non-farm payroll and suggest the labor market remains tight. December’s Philly Fed at -10.5 from -5.9 however looks weak while final Q3 GDP was revised down to a still very strong 4.9% from a preliminary 5.2%. Most importantly core PCE prices at 2.0% annualized saw an unusually large downward revision from 2.3%.
European morning session
Early European FX trading only saw the JPY lose some ground, but not driven by news.  Flows in thin pre-Christmas conditions were the key issue.  USD sentiment is neutral to mildly bearish.  Fed officials pushing back against early cuts is a reason for consolidation before new data is seen in the New Year (e.g. NFP Jan 5), but end of year flows are expected to produce some selling. 
GBP has stabilized against the EUR, but the tone remains mildly negative with Wednesday’s much weaker than expected UK CPI data having prompted the money market to price in close to six 25bps rate cuts in 2024.  Traders feel that GBP can drift out versus EUR, though some also note Thursday comments by ECB De Guindos suggesting rate cuts can only come when inflation is heading “towards” 2%.