FOREX-Dollar falls on ISM services; Fed decision looms

* Dollar retreats from 1-month high vs basket, euro

* Focus on whether Fed will keep low rate pledge

* U.S. service sector grew in October, but below forecast (Updates with ISM services data, adds quotes, updates prices)

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 buoyed 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 policy-setting Federal Open Market Committee will uphold its pledge to keep the benchmark fed funds rate low for "an extended period" even as the economy shows signs of improving. For more see [ID:nN02441229].

The dollar hit a session low versus the euro after a report showing the U.S. service sector grew in October for the second consecutive month helped stocks on Wall Street extend gains. [ID:nN042167]

"Investors are probably looking at the increase in new orders, which is a leading indicator for economic activity," said Jacob Oubina, currency strategist at Forex.com in Bedminster, New Jersey. "Also export orders increased which suggests that dollar weakness is helping boost exports. That's a welcome sign for the economy."

But overall, Oubina said, the report was mixed and that "the most worrisome" is the drop in the employment index, which "doesn't bode well for Friday's nonfarm payrolls report."