U.S. Dollar Pulls Back Across the Board Following Comments From Secretary Geithner

The dollar experienced short covering activity in early European trade after U.S. Treasury Secretary Geithner offered more soothing words on China’s appetite for U.S. Treasury Securities overnight and a Chinese official was quoted in the FT stating that there is little alternative to the dollar in reference to reserve holdings. A combination of dollar supportive comments and consolidation across European indices weighed on the commodity bloc and emerging market currencies. However, the move ran its course and dollar supply came back ahead of the N.Y. open as the Kremlin touted the idea of a supra-national world currency that may discussed as the BRIC summit this month. EUR-USD traded around 1.4200 and Cable remained in close proximity to 1.6400 after a Middle Eastern account was a good buyer from the 1.6325 lows. Elsewhere, USD-JPY traded in to 96.00 after interbank sales, while the JPY crosses found support on dips, but remained off their recent peak amid general consolidation.