U.S. dollar slightly corrected after rising last week - 23.12.2013

On Friday, the U.S. dollar fell slightly against other currencies. We believe that the reason of this was profit taking. Investors took profits after the Fed's decision to taper assets purchasing program by $ 10 billion per month. On the last day of the week the market activity has decreased due to the holidays in Japan. Today they celebrate Emperor's Birthday.

According to some data, the U.S. third quarter GDP grew by 4.1% and not 3.6% as previously expected. This is the most significant increase from the fourth quarter of 2011. Largely due to this S&P500's weakly 2.4% increase was the highest for the past 5 months. However, demand for U.S. government bonds remained weak. Investors expect higher yield and do not hurry to buy them. We do not exclude that it also was the reason of some correction in USD. However, in general, the uptrend prevails.

On Friday, the Australian dollar (AUDUSD) has shown its highest growth during the month (+0.18 %). China has increased markedly interbank repo rate. Investors believe that this indicates that the economy is not slowing, but is growing faster than expected. Raising of rates even required the intervention of People's Bank of China, which announced provision of 300 billion yuan ($ 50 billion) on the domestic interbank market within three days. Investors hope that the demand for Australian minerals from China will remain high. From the beginning of 2013 the weakening of the Australian dollar against the U.S. dollar was 14%, and against euro 20%.

Among the major currencies only Japanese Yen (USDJPY) exceeded "Aussie". Its rate against U.S. dollar from the beginning of the year fell by almost 17%. The growth of the dollar index (USDIDX) from the beginning of the year was much more modest of about 3.5%. According to the Commodity futures trading commission, net shorts in Yen peaked from July 2007. As we have already noted, representatives of the Bank of Japan forecast the course of 108 yen per dollar. Representatives of several major international banks are more cautious and expect 106 yen per dollar.

We suppose that due to the Christmas holidays this week activity in the Forex market will not be high. Nevertheless, we recommend to follow the release of macroeconomic data (for details, see "Economic Calendar").