Europe Summary and Highlights 31 Dec
The USD moved sideways in Europe.
Europe Session
European trading saw the USD move sideways, with the FOMC minutes having failed to provide direction. Data will once again be key for Fed views and the USD into 2026, with traders seeing the standout being Jan 9 December employment report. GBP lost a little ground against the EUR on flows, with no news.
Traders views for 2026 are biased towards further USD losses, but at a smaller scale than 2025. The USD is not so overvalued as the start of 2025 and the Fed is expected to pause in H1 2026. Though the Supreme court ruling on reciprocal tariffs is expected to increase FX volatility it may not provide lasting direction. EUR is expected to remain good, helped by FX hedging of the huge U.S. equity positions by European funds. Views on the JPY are split between ongoing weakness versus catch-up on other USD majors – BOJ FX intervention will be a swing factor.
Asia Session
Kiwi led with losses as regional sentiment sours on the last Asia trading session for 2025. It is reported that China will ease property taxes but avoids bold housing stimulus by extending a policy waiving value-added tax on selected home sales. In a somewhat slow market, we are seeing the NZD/USD led with a 0.41% losses to 0.5769, AUD/USD is also trading 0.14% lower while USD/CAD rises 0.05% as metals fall further.
The USD is trading broadly higher on the last 2025 trading day. The bond market is already in holiday mood and see little movement. USD/JPY is trading 0.17% higher at 156.60. Else, EUR/USD and GBP/USD are both down 0.11%.