The dollar regains strength against the yen but modestly lower against the euro and the pound amid subsiding market nervousness following Fed Chairman Bernanke??™s testimony. The dollar dropped across the board when markets focused on Bernanke??™s assessment of the uncertainty in subprime mortgage default and the risks of spillover into the broader economy. But a clearer reiteration of the inflation risks being the Fed??™s ???predominant policy concern??? had caused a sharp rebound in equities, which took the luster back from the Japanese currency. The redress in risk appetite is now boosting the higher yielding currencies of the Aussie and sterling.

At 8:30 am is the final revision on US Q4 GDP expected to remain unchanged at 2.2%, which would mean little or no reason for any market moves. Growth has fallen from as high as 3.5% in Q1, to 2.6% in Q2, 2.0% in Q3 and 2.2% in Q4. The preliminary figure of 2.4% emerged after advanced estimates were as high as 3.5%. The final quarterly growth report will also give a first look on Q4 corporate profits.

Also at 8:30 am are weekly jobless claims, expected at 320k after 316k. The last 4 reports have shown steady decline in jobless claims, with the 4 week average dropping to 326K from as high as 340K, conveying some sort of stability in the labor market that is not shared by monthly non-farm payrolls.

Yen seen regaining composure, 116.80 eyed

EURUSD remains capped at 1.3370 trend line

Sterling eyes modest gains towards 1.97