Dollar bulls come charging back as Greenspan gives a positive boost

The dollar made a spectacular recovery on Friday as the market cheered the Fed Chairman’s positive sentiment over the US current account deficit despite a weaker than expected payrolls number and Michigan consumer sentiment figures.
The opening of the US session saw the dollar tumble by around a cent against the euro as the single currency was bought on a softer than expected payrolls at 1, 46,000 and a downward revision in the same figure for the previous three months. Further accelerating the dollar fall was the Michigan consumer sentiment, which also came lower at 95.5 against the expected 97.1. But soon after these releases Greenspan’s speech reflecting the incumbent administration’s resolve to reduce the deficit and his own long term view on a falling deficit helped the US currency which made a sharp U-turn gaining finally more than a cent and a half to close the week at $1.2870- finally breaching the $1.2930 support level.
Yen’s losses were not as sizeable as its European counterpart as it fell from a low of 104.50 to 104 as the traders awaited the final word from the weekend’s G7 meet where it is now expected-with the absence of Mr. Snow and China’s refusal to accede to the floating its currency- that the FX issues will take a back seat.