The U.S. dollar fell against major rivals on Wednesday, as investors opted for high-yielding, riskier currencies after a U.S. jobs report increased investment sentiment. Reducing the dollar's safe haven appeal, U.S. stocks and some economic sensitive commodities such as crude oil and copper rose after the ADP employment index showed the U.S. private sector lost fewer jobs than expected. "The dollar's weakness return to the fray as risk appetite is boosted by a smaller-than-expected decline of payrolls," said Ashraf Laidi, chief market strategist at CMC Markets. "But interestingly, the weakness is not as pronounced as it seems as key levels are still held. This is all raising possibilities that Friday's jobs report will show a smaller decline in payrolls than expected." U.S. private-sector employment fell by 491,000 jobs in April, the smallest decline since October, according to the ADP employment index released Wednesday. The index comes two days before the government releases its estimate of April nonfarm payrolls. Economists surveyed by MarketWatch are looking for payrolls to drop by 580,000 in the government survey, which would be the smallest decline since October. In Wednesday morning trading, the euro rose 0.2% to $1.3334, while the British pound rose marginally to $1.5067. Meanwhile, the dollar slipped slightly to 98.84 yen. The dollar index (DXY), a measure of the greenback against a basket of currencies, slipped 0.1% to 84.191. But over 12 months, the dollar index is up 15%. "This is a risk-taking trade," said T.J. Marta, strategist and founder of research firm Marta on the Markets. "If people are confident, they buy riskier currencies." The weakness for the greenback also came after reports that Bank of America would need roughly $35 billion in fresh capital - contrasting with reports just a day earlier that it wouldn't need more than $10 billion. "Profit-taking hit the pro-cyclical and commodity [foreign-exchange] bloc overnight as caution set in ahead of Thursday's U.S. bank stress publication," said strategists at Societe Generale. On Wall Street, U.S. stocks moved broadly higher, with the Dow Jones Industrial Average (DJI) up 0.7% at $8469.11. Some analysts said despite Wednesday's weakness, the dollar will still rise in the long term. Daniel Tenengauzer, head of foreign-exchange strategy at Merrill Lynch, said the dollar will continue to strengthen through the third quarter of 2009. "We still do not believe a quick recovery and reflation scenario, i.e., the kind of inflation that would be U.S. dollar-negative, is likely in the next few quarters. Commodity prices have stabilized, but without the sort of substantial boost that would signal immediate trouble for the dollar," he said in a note to clients. Rate decisions in Europe are due Thursday, with the focus on the European Central Bank, which is expected to cut interest rates and possibly announce new measures designed to reflate the contracting euro-zone economy. In the U.K., meanwhile, a gauge of the services sector rose to an eight-month high. The CIPS/Markit purchasing-managers index rose to 48.7 in April from 45.5 in March. Any level below 50, however, indicates an economy that's contracting.

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