4/2/2008 2:06:00 PM Federal Reserve Chairman Ben Bernanke took to Capitol Hill on Wednesday to deliver testimony's on the US economy to a joint Congressional committee. Market watchers worldwide were seeking insights about the health of the world's biggest economy and on the Fed's role in brokering the takeover of Bear Stearns by rival JP Morgan Chase.Bernanke's testimony overshadowed the release of the ADP's employment report, which showed that employers in the private sector surprising added 8,000 jobs - a good indication that Friday's pivotal government jobs report could show the jobs situation stabilizing.In prepared remarks, Bernanke addressed the recent financial turmoil and actions that the Federal Reserve is taking to address these issues. For the first time, Bernanke admitted that GDP may “contract” slightly in the first half of 2008, citing a weaker near-term economic outlook.“It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke said.Aside from policy actions, the Federal Reserve's role in the Bear Stearns (BSC) sale in mid-March is evidence of their expanding role as a market stabilizer.“With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence,” the Fed Chairman explained. “Given the current exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Stearns could have been severe."Before the opening bell Wednesday morning, Automatic Data Processing, Inc. (ADP) released its report on private sector employment in the month of March, showing that the private sector unexpectedly added jobs compared to the previous month. The report showed that non-farm private employment increased by 8,000 jobs in March following a revised decrease of 18,000 jobs in the previous month. Economists had expected a decrease of about 30,000 jobs compared to the decrease of 23,000 jobs originally reported for February.Not all the news on the economic front was rosy. Orders for manufactured goods fell more than economists had been excepting in February, according to a report released by the Department of Commerce on Wednesday, with orders for both durable and non-durable goods showing notable declines. The report showed that new orders for manufactured goods fell 1.3 percent in February following a revised 2.3 percent decrease in January. Economists had expected orders to fall 0.7 percent compared to the 2.5 percent decrease originally reported for the previous month.Rounding out the economic releases from the US, the Energy Information Administration released its report on oil inventories in the week ended March 28, showing that crude oil inventories rose much more than expected while gasoline inventories fell more than expected. The report showed that crude oil inventories increased by 7.4 million barrels after coming in unchanged in the previous week. Analysts had been expecting a much more modest increase of about 2.3 million barrels. Overseas, Euro zone producer prices rose 0.6% month-on-month in February, the Eurostat said Wednesday. Producer prices climbed at a faster pace of 0.9% in January. The monthly growth in producer prices matched economists' expectations. The European Central Bank has refrained from lowering interest rates despite concerns about a strong euro, maintaining that inflation control remains its primary focus.Forex - Greenback Falls Sharply Against Majors [EUR/USD]4/2/2008 1:06:02 PM The US dollar fell sharply against its major counterparts at about 1:00 pm ET. As of now, the dollar is trading near 1.9868 versus the pound, 1.5657 against the euro, 1.0118 versus the franc and 0.9138 against the Aussie.Forex - US Currency Sets Multi-day High Versus Kenyan Shilling [USD/KES]4/2/2008 12:55:48 PM The US dollar strengthened against the Kenyan currency in New York on Wednesday. At about 9:10 am Eastern Time, the dollar-shilling pair hit 5-day high of 63.00, compared to yesterdays' close of 62.85. Currently, the pair is trading at 62.95.According to a report released by the Department of Commerce on Wednesday, showed that new orders for manufactured goods fell 1.3 percent in February following a revised 2.3 percent decrease in January. Economists had expected orders to fall 0.7 percent compared to the 2.5 percent decrease originally reported for the previous month. Wednesday morning, Automatic Data Processing, Inc. (ADP) released its report on private sector employment in the month of March. The report showed that non-farm private employment increased by 8,000 jobs in March following a revised decrease of 18,000 jobs in the previous month.
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