The USD is expected to continue to be supported versus G3, while it could underperform relative to emerging market currencies. With the uncertainty regarding the first hike of the Fed behind us, risk premia should decrease somewhat and help risky assets in the short term. Price action during the next two weeks could be erratic as liquidity dries up with the holiday season kicking off. 

The most important release will be PCE core Wednesday (0.1% m/m vs. 0.0% consensus). It is believed now that the Fed has officially begun its normalization cycle, the inflation outlook will set the pace at which the Fed will tighten monetary conditions. 

"We will closely track our tradable CPI basket and wage measures in the months to come to gauge potential upside in the USD", says Barclays.

On December 22 the final 3Q GDP is released and a print of 1.8% q/q is anticipated. The next day a decline is expected in November's durable goods orders (-1.0% m/m headline, -0.1% ex transport). Michigan consumer confidence index is expected to be confirmed at 92 (Wednesday 23), while the Conference board confidence index should increase to 92.5 from 90.4 last month (December 29). Finally, the employment report, released on January 8, should confirm the strength of the labour market, and NFP is expected to increase by 225k.