Donkey in Christmas setting (3)
I believe the answer is:
ass
'donkey' is the definition.
(ass is a term for a donkey)
'in christmas setting' is the wordplay.
'in' indicates the answer is hidden within the clue.
'ASS' is hidden in the letters of 'christmas setting'.
(Other definitions for ass that I've seen before include "Horse relative" , "Donkey or silly person" , "sap" , "Small hoofed animal" , "One easily had" .)