The single currency was largely unchanged against the U.S. currency on Wednesday with investors reluctant to place big bets ahead of ECB’s interest rate decision on Thursday. Euro fell briefly to 1.4592 versus the dollar on speculation the European Central Bank may signal the economy is slowing (although the ECB is widely expected to keep the benchmark eurozone interest rate at 4%) and then rebounded to 1.4672 on short-covering.

Futures markets already reflect expectations that the ECB will cut rates by a half percentage point by the third quarter of 2008, but are split on chances of a further quarter-point easing by year-end. Interest-rate futures showed the implied rate on the June Euribor contract was 3.91%, down from 4.03 percent a week ago.

The British pound fell briefly to 1.9554 and then rebounded to 1.9636 ahead of the interest rate decision from the Bank of England, which is widely expected to cut rates by 25 basis points to 5.25% from 5.50%. U.K. consumer confidence dropped by 0.4% in January, the lowest in at least three years.

Canada's dollar strengthened to 1.0006 versus the U.S. currency as Canadian business and government spending unexpectedly increased in January and Statistics Canada said building permits rose in December.

The Standard & Poor's 500 Index fell 0.8% to 1,325.42, after rising as much as 1.2%. Japanese shares dropped the most in more than two weeks, while stocks in Europe rose. The greenback rebounded briefly from 106.18 to 106.80 and then traded sideways in thin U.S. session.

Thursday will see the release of Japan’s machine tools, U.K. industrial and manufacturing production, German factory orders and U.S. pending home sales.