* Dollar retreats from 1-month high vs basket, euro
* Focus on whether Fed will keep low rate pledge
* U.S. private employers shed 203,000 jobs in October (Adds quotes, updates prices; changes byline, changes dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, Nov 4 (Reuters) - The dollar fell against the euro and a basket of currencies on Wednesday as firmer equity and commodity prices stoked risk appetite and investors braced for a policy decision from the Federal Reserve.
The decision at about 2:15 p.m. (1915 GMT) is the key news for the day, with the focus on whether the Federal Open Market Committee will uphold its pledge to keep the Fed funds rate low for "an extended period" even as the economy shows signs of improving.
Given the unwinding of gains in higher-yielding assets in recent days, analysts said any indication U.S. interest rates will stay low would prompt investors to take on riskier investments such as stocks and commodity currencies, which may push the dollar lower.
"With FOMC due later today volatility in (currencies) could spike substantially if the Fed chooses to change its language," said Boris Schlossberg, director of currency research at GFT Forex in New York.
"For now however, risk trades continue to dominate on the broad market belief that (the Fed) will not change the key words 'extended period,'" he added.
Surveys overnight showing a bigger-than-expected expansion in the euro zone and the UK services sectors encouraged the view that the global economy is recovering. That lifted stock and sent oil prices above $80 a barrel.
In early New York trading, the euro was up 0.5 percent on the day at $1.4788 and hit a session high of $1.4800, according to Reuters data.
The euro earlier pared gains after Fitch ratings agency downgraded Ireland's sovereign rating to 'AA-' from 'AA+' with a stable outlook.
The ICE Futures U.S. dollar index, which measures the dollar against a basket of six currencies fell 0.5 percent to 76.035, pulling away from a one-month high of 76.817 hit on Tuesday.
Investors shrugged off a report showing U.S. private employers shed 203,000 jobs in October, fewer than a revised 227,000 jobs lost in September.
The reading, however, was above the median of estimates from economists surveyed by Reuters for a decline of 190,000 private-sector jobs last month.
"The fact that it's marginally weaker than expected increases the odds that we have a 10 percent handle on unemployment on Friday," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.
"We did have a month-on-month improvement in ADP but we are still losing jobs, and the 10 percent unemployment barrier has huge psychological significance," he added.
(Additional reporting by Steven C. Johnson in New York and Jessica Mortimer in London; editing by) (Editing by Theodore d'Afflisio)