Dollar mixed as market braces for long-awaited Fed stimulus

The dollar was mixed in Asian trade Wednesday as investors braced for another round of stimulus measures from the Federal Reserve to kickstart the sluggish US economy, analysts said.

The dollar traded at 80.635 yen, down marginally from 80.64 yen in late US trade Tuesday while the euro was slightly lower at $1.4032 from $1.4034.

Against the yen, the euro was higher at 113.137 from 112.22. Markets in Japan are closed for a public holiday Wednesday.

The Federal Reserve's policy-making panel, the Federal Open Market Committee, has started a two-day meeting in Washington and is widely expected to unleash a second wave of quantitative easing (QE) on Wednesday.

"It’s QE2 day today. The market has adjusted its expectation that QE2 will be closer to $500 billion instead of earlier expectations for it to exceed one trillion," analysts from Singapore's DBS bank said in a report.

"More importantly, the FOMC statement will be scrutinised to see if the Fed keeps the door open to deliver more in the future to achieve its dual mandate of price stability and job creation.

"If so, this should provide the momentum for the US dollar to maintain its depreciation path."

The greenback has suffered heavily in recent weeks as traders anticipated the Fed would renew its asset purchasing policies, which effectively mean printing more money, in a bid to boost the lagging economic recovery.

Source AFP