The dollar was firm as some appetite for risk resurfaced following a heavy hint from US Federal Reserve chairman Ben Bernanke that US borrowing costs may be cut next month. In a letter to Senator Charles Schumer, Bernanke said the Fed is "prepared to act as needed" to mitigate some of the impact from the disruption in the financial markets. His comments reinforced expectations that the central bank will cut its key Fed funds target rate from the current 5.25 pct at its next rate-setting meeting on Sept 18. As a result they helped lift risk appetite across the financial markets, most evidently in the performance of US stocks overnight. And though a prospective rate cut reduces the dollar's yield attraction, the US currency has garnered some support from more hopes the Fed will do enough to prevent the US economy from sliding into recession in the wake of the sub-prime crisis. In the currency markets, the increased appetite for risk is most evident in the performance of the yen as some investors start to edge back into more riskier trades, such as carry trades. "The yen crosses were once again on the backfoot -- and the dollar was on the rise -- following their substantial rebound yesterday," said Bank of New York Mellon currency strategist Neil Mellor. During the height of the market turmoil earlier this month, carry trades, where investors borrow in low-yielding currencies to buy higher-yielding assets, have been unwound heavily. This unwinding has seen the dollar fall from a high of 124 yen in mid-June to a low of below 114 in mid-August, while the euro has dropped from just below 169 yen in mid-July to around 150 in mid-August. Despite this slight reversal in risk aversion today, the markets remain in jittery mood, with speculation mounting that more needs to be done by the world's major central banks to raise confidence, particularly in credit markets. On the economic calendar there are some key US numbers scheduled for release later in today's session that will likely offer further short-term direction. At 1.30pm, there is revised US Q2 GDP and weekly jobless claims numbers, followed at 3pm by the Conference Boards' help wanted index of job advertisements. "Having had two near data-free days dealers will be looking forward to the numbers," said IFR Markets analyst Matthew Forster-Smith. Tomorrow's speech from Bernanke at Jackson Hole, Wyoming, though is the main event of the week.