Although the single currency fell briefly below Monday's low of 1.2510 to 1.2479 fm 1.2545 in Asian morning, euro erased all the losses and rebounded strongly to 1.2607 due to the rebound in Asian and European Equities. Euro was also supported as the RBA kept its key cash rate steady at 4.5% for a second month and it remained optimistic about the outlook for Asia and the domestic economy. Later, despite a brief pullback fm 1.2607, renewed buying interest at 1.2565 lifted the single currency again on the initial firmness in U.S. stock markets n the euro hit an intra-day high of 1.2663 in NY morning b4 retreating as DJI erased most of the early 170-point gains. DJI eventually closed the day at 9743.62, up by 57.14.The European equities rallied on Tuesday as FTSE 100, DAX, CAC 40 rose by 2.93%, 2.15% and 2.73% respectively.

In other news, bank of Greece Governor Georges Provopoulos told Greek television Mega Channel that additional austerity measures were not needed to meet this year's public deficit target.

Versus the Japanese yen, despite dollar's brief drop to 87.42 due to the initial weakness in Asian equities, the greenback rebounded from there on the rise in dollar/yuan NDF because of market uncertainty over future yuan policy together with recent cash shortfall in the Chinese money market. However, the greenback later ratcheted higher to an intra-day high of 87.98 on cross selling in yen due to the rally in European equities as eur/jpy, aus/jpy and gbp/jpy rose from 109.14 to 110.85, from 72.73 to 75.02 and from 131.90 to 133.68 respectively. Later, the pair erased all its intra-day gains and fell sharply to 87.35 after the release of much weaker-than-expected U.S. ISM non-manufacturing data which decreased to 53.8 in June versus the economists' forecast of 55.0.

Despite cable's initial drop to 1.5081 in the Asian morning, the British pound rebounded on short-covering in tandem with euro and rose to 1.5227 in NY morning before retreating on cross selling in sterling (eur/gbp rose from 0.8268 to 0.8341 n gbp/jpy fell fm 133.68 to 132.27).

Although the Swiss Franc initially dropped to 1.0564, the pair rose to 1.0665 after the release of lower-than-expected Swiss CPI which came in at -0.4% m/m and 0.5% y/y in June versus the expectations of 0.0% and 1.0% respectively before another fall to 1.0562.

The commodity-linked currencies gained due to the optimistic comment from RBA on Tuesday as the Australian dollar rose from 0.8317 to 0.8560, the New Zealand dollar advanced from 0.6826 to 0.6975 while usd/cad fell sharply fm 1.0678 to 1.0486.

Economic data to be released on Wednesday include: U.K. Nationwide Consumer Confidence, EU GDP, Germany Factory orders, Canada Ivey PMI.