The greenback strengthened against euro on Tuesday as the disappointing earning reports from UBS coupled with a reorganisation of U.K. banks Lloyds and Royal Bank of Scotland increased the dollar's safe-haven appeal. In late European afternoon, the ICE futures U.S. dollar index hit its highest since early October at 76.817 before retreating in New York afternoon as DJI pared its early 85-point losses and closed down 17.69 points.

Euro traded relatively quietly in Asia with Tokyo markets closed for a holiday. The single currency tumbled from 1.4811 to as low as 1.4626 in late European session partly due to the selloff in European stock markets. Cross selling in euro versus the pound also weighed on the single currency as eur/gbp tumbled from 0.9061 to 0.8935. EU Commission said EU must support the economic recovery by fully implementing announced steps and repairing banks and indicated risks to growth. The EU commission forecast the eurozone economy had exited recession in Q3 with 0.5% q/q growth. However, buying interest on dips lifted the pair in late New York afternoon. In addition, the market braced for central bank meetings in the U.S. on Wednesday, eurozone and U.K. on Thursday.

Despite intra-day brief rise to 1.6420 in Asian morning, cable fell from there to as low as 1.6260 after the release of weaker-than-expected U.K. PMI construction data which came in at 46.2 versus economists' forecast of 47.2 and below previous reading of 46.7 in September. However, sterling rebounded strongly in late European afternoon as Halifax survey showed U.K. house prices rose by 1.2% m/m in October, more than the expectation of a 0.7% rise.

Elsewhere in the market, spot gold price hit a record high at 1087.30 per ounce on news that the IMF sold 200 tonnes of gold to the Reserve Bank of India. In addition, the Australian dollar retreated after the central bank hiked rates by 25 basis points to 3.5% as widely expected. The central bank said it would gradually lessen stimulus and saw the risk of serious economic contraction as having passed. Aud/usd dropped to 0.8916 in late European afternoon before rebounding.

Data to be released on Wednesday include U.K. Nationwide consumer confidence, Australia, retail sales data, German, eurozone, U.K service PMI, eurozone PPI, U.S. ADP employment, ISM non-manufacturing, Fed rate decision (economists are expected to keep rate unchanged at 0.00-0.25%).