posted by 4x-news on May 6

The dollar recovered some of its earlier losses against the majors, pushing the euro toward the 1.3325-level and edging up to 99.20 versus the yen. A combination of upbeat sentiment from Fed Chairman Bernanke’s Congressional testimony and better than expected US data helped prop the greenback higher. The April non-manufacturing ISM beat consensus estimates for an increase to 42.0 from 40.8 in March, instead climbing to 45.2, albeit still beneath the key 50-level that separates expansion from contraction.

Fed Chairman Bernanke, testifying before the Joint Economic Committee, acknowledged improving conditions in the financial markets in recent months. He said the Fed was “not trying to target a particular interest rate”, with the FOMC’s objective to “provide more liquidity to the system and to help private credit markets”. Bernanke continues to “expect economic activity to bottom out, then turn up later this year”, adding that key elements in this forecast incorporate the Fed’s “assessments that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters”. His comments reiterated recent market sentiment that the US economic recession has moderated somewhat and beginning to bottom out.

The economic calendar for Wednesday is light, consisting of the April ADP private-sector payrolls figure. Traders will pay close attention, particularly ahead of Friday’s key jobs report. Consensus estimates look for a loss of 700k jobs in April, compared with 745k jobs lost in March. The April unemployment rate, due out on Friday at 8:30 AM is seen creeping up further to 8.8% from 8.5%, its highest rate since October 1983. Non-farm payrolls are expected to reveal another 631k jobs lost in April versus 663k a month earlier.