The dollar rebounded against most widely traded currencies on Friday in New York, Rising on a combination of more positive US economic signals and some end-of-the-week profit taking on gains logged over the past several sessions against the US currency. The dollar's comeback began overnight on the back of the comments by Ben Bernanke lateon Thursday regarding the the eventual tightening os US monetary policy, and then accelarated in in North American trading following a better than forecast report on the US trade balance in August. The trade deficit unexpectedly narrowed by $1.2 billion, to $30.7 billion, during the month.
The dollar was also supported by higher yields on US treasury securities Friday, which rose on the impact of Bernanke's comments about the need to tighten monetary policy and shrink the Fed's blaoted balance sheet once the economy shows signs of improved improvement. Loose monetary policy and ultra-low interest rates encourage investors to use the low-yielding dollar to fund bets on riskier assets such as commodity-backed currencies such as AUD and CAD.