The greenback fell broadly against major currencies on Wednesday as steep job losses in the private sector reinforced investor expectations for a prolonged recession. The single currency rallied to a 3-week high of 1.3747 versus the dollar. U.S. dollar weakened against the Japanese yen to 92.44.

ADP employment for December showed a 693,000 jobs decrease in U.S. private sector versus the forecast of a reduction of 495,000. The data added speculation the U.S. non-farm payrolls to be released on Friday will show a 500,000 jobs cut in December.

Eurozone producer prices index fell sharply by 1.9% in November in part due to a sharp drop in energy costs. The European Central Bank is expected to lower its interest rates by at lease 25 basis points next week from current 2.50% as the region entered a recession. The single currency tumbled against the sterling from 0.9175 to 0.8960.

The Bank of England will lower its benchmark rate by 50 basis points on Thursday to an all-time low 1.5% as the British economy entered its first recession in 17 years. The British pound rallied from 1.4803 to 1.5285 on active cross unwinding in sterling.

U.S. Treasury Secretary Henry Paulson said the Obama adminstration should consider converting mortgage finance giants Fannie Mae and Freddie Mac into 'public utility-like' mortgage guarantors. Paulson said policy makers must decide the appropriate level of U.S. government housing subsides for the long term.

Thursday will see the release of Australian trade balance, German trade balance, eurozone business climate, GDP and unemployment rate, German industrial production and factory orders and U.S. jobless claims.