The U.S. dollar fell against other major opponents on Wednesday's European session as stocks gained after Moody's retained Spain's rating at investment grade and speculation grew of a Spanish bailout. Offering some respite to the Spanish government that is under pressure to officially request a European bailout, Moody's Investors Service on Tuesday left its Spanish sovereign rating unchanged at investment grade, but with a 'negative' outlook. The rating agency cited a number of positive developments since June, including the European Central Bank's announcement of the bond-purchase program and evidence of the Spanish government's continued commitment to implement the fiscal and structural reform measures. Moody's has a Baa3 rating on Spanish government bonds. The ratings agency found that the risk of the Spanish sovereign losing market access has been materially reduced by the willingness of the ECB to undertake outright purchases of Spanish government bonds to contain their price volatility. The possibility of Spain requesting financial aid through a precautionary credit line from the EUR 500 billion rescue fund, the European Stability Mechanism, is currently under discussion, the Financial Times reported Wednesday. This money could then be used to purchase Spanish bonds at auction in an emergency, the newspaper said citing senior officials. Because the aid would only be a credit line rather than a bailout, the scheme is expected to face less political opposition in northern creditor countries, it said. The greenback fell to a 5-day low of 0.8204 against the NZ dollar with 0.825 seen as the next downside target level. The pair ended Tuesday's deals at 0.8144. Against the Canadian currency, the greenback slipped to 0.9841 from Tuesday's New York session close of 0.9868. The greenback-loonie pair is likely to find next downside target level at 0.98. The greenback continued its early decline against the Australian dollar and hit 1.0345, its lowest level since October 2. If the U.S. currency drops further, it is likely to find next support level at 1.04. A leading indicator of Australia's economic activity rose at a faster pace than its long-term trend in August, for the first time in a year, a survey by Westpac and the Melbourne Institute revealed. The annualised growth rate in the Westpac-Melbourne Institute leading index, which indicates the likely pace of economic activity three to nine months into the future, was 3 percent in August, just above its long term trend of 2.7 percent. Against the euro and the pound, the greenback lost ground, hitting a 1-month low of 1.3129 and a 12-day low of 1.6180, respectively. On the downside, the greenback may break 1.32 against the euro and 1.62 against the pound. At yesterday's close, the greenback was worth 1.3055 against the euro and 1.6113 against the pound. Bank of England policymakers unanimously decided to maintain quantitative easing at GBP 375 billion and the interest rate unchanged at 0.50 percent, the minutes of the meeting showed. The nine-member MPC discussed whether it was appropriate to modify or continue with the programme of asset purchases that it had agreed at its July meeting. Also, they discussed the likely effectiveness of further asset purchases, should they be required. The greenback held steady against the franc and the yen after falling to a new multi-month low of 0.9218 and a 2-day low of 78.63, respectively in the Asian session. The greenback is now trading at 0.9221 against the franc and 78.70 against the yen, compared to Tuesday's close of 0.9262 and 78.90, respectively. Investor confidence in Switzerland improved in October amid less pessimistic view of the economy's prospects in the coming six months, a survey by the Center for European Economic Research (ZEW) showed today. The ZEW-Credit Suisse Indicator of Economic Sentiment improved by 6 points to -28.9 in October. The indicator reflects the expectations of the surveyed financial market experts regarding the economic development in Switzerland on a six-month time horizon.

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