The dollar relinquished its recent gains versus the majors, tumbling by over four big figures against the pound to 1.4960. The economic data released earlier in the session was mixed, with durable goods, factory orders, pending home sales and non-manufacturing ISM reported in the Tuesday session.

The November headline durable goods orders posted a 1.5% decline, worst than expected and deteriorating from a 1.0% decline a month earlier. The excluding transportation durable goods orders increased by 0.6%, albeit lower than the 1.2% recorded previously. Factory orders slumped by 4.6%, compared with a revised 6.0% decline in October. Pending home sales remained soft, down 4.0% in November versus a revised 4.4% decline a month earlier to 82.3. The December non-manufacturing ISM unexpectedly improved to 40.6 from 37.3 a month earlier.

Although the calendar for Wednesday is light, traders will closely scrutinize the December ADP private sector payrolls figure - which is estimated to post a loss of 475k jobs, deteriorating sharply from a month earlier at a loss of 250k jobs. The report will be assessed as a proxy to Friday's key non-farm payrolls figure and unemployment rate, which are seen at -500k and 7.0%, respectively. Further, the unemployment rate will be at its highest level since 1993.

The minutes from the December FOMC meeting, in which the Fed cut rates to an unprecedented range of 0%-0.25%, revealed a gloomy outlook on the economy. The FOMC acknowledged deteriorating labor market conditions as well as declines consumer spending, business investment and industrial production. The Fed anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time. The minutes added inflationary pressures have diminished appreciably and expects inflation to moderate further in coming quarters'. The Fed said that over the coming quarters, it would purchase substantial quantities of debt in order to support the housing and mortgage markets. With interest rates already hovering around 0%, the FOMC pledged to consider ways of using its balance sheet to further support credit markets and economic activity.