North American Summary and Highlights 23 Dec

North American session

Better than expected Q3 U.S. GDP prompted a USD bounce in NY trading, with the outcome increasing traders view that the Fed will be on hold for Q1 2026.  The JPY lost the most ground, which is a partial unwind of Tuesday’s Asia move.  The November industrial production data provided little impulse.  Meanwhile, traders are looking forward to 2026 and the risk on U.S. equity view supporting the USD through the holiday period.  

Meanwhile, no real reaction in FX or U.S. Treasuries to U.S. Treasury secretary reported suggestions (here) that the Fed should move to target an inflation range (e.g. 1-3% around 2%) rather than a pin point 2% and that the dot plot should be scrapped.

 European morning session 

European trading has seen the focus remain on the JPY after Asia’s rally on repeated threats from Japanese officials over FX intervention.  Traders are watching whether a clean break is seen of 156.00 on USD/JPY, which could open up a test of 155.00 and 154.45 after Christmas.  The market is now waiting for the U.S. Q3 GDP data, where a reasonable breakdown is expected.  EUR/USD and other European majors are lagging the USD/JPY move, but still benefitting marginally.

GBP firmed again against the EUR, as the technical bounce continued and traders talk about only one BOE rate cut in 2026.  Charts suggest scope to 0.8670.  No signs of reaction to reports suggesting that some of the Labour government cabinet support a UK return to the EU customs union to boost growth.