The dollar roared back, overturning some of its earlier losses, after Federal Reserve Chairman Alan Greenspan said the U.S. current account gap cannot widen forever.
Market forces and tighter U.S. fiscal policy should stabilize, and may cut, the gap, Greenspan said at a conference in London hosted by the British Treasury.
Unlike a speech in November, when Greenspan sent the dollar and U.S. stocks plunging when he expressed concern about the increasing amount of money America is borrowing from abroad to finance its record trade deficits, in Friday's speech he said he believed that any adjustment in the trade deficit will be accomplished "without any significant consequences to aggregate economic activity."
The euro fell over a cent to trade lower on the day at $1.2939. It fell to $1.2912, near a three-month low, after hitting a session high of $1.3043 after the softer-than-expected U.S. jobs report released this morning.
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