By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — The U.S. dollar fell against the euro in choppy afternoon trade in Asia on Tuesday, with attention turning to this week’s Federal Reserve monetary policy meeting.
The ICE dollar index DXY -0.08% , a gauge of the greenback’s performance against a basket of six major global currencies, fell to 80.287 — well off the Asian session’s 80.371 high — from 80.309 late in North America on Tuesday.
The euro EURUSD +0.24% jumped to $1.2953, bouncing off the day’s $1.2927 low, ahead of European markets’ open. The common currency was trading hands at $1.2942 in the U.S. Monday.
The Federal Open Market Committee, scheduled to meet Wednesday, is expected by several analysts to announce an expansion its monetary easing to maintain purchases of longer-maturity securities, given that its so-called Operation Twist policy is set to expire at the year-end.
Under Operation Twist, the Fed currently sells short-term securities and buys longer-maturity bonds in a strategy aimed at easing longer-term interest rates.
“Unless the Fed wants to let a significant amount of stimulus instantly evaporate they will announce fresh measures to keep the party going,” Kathy Lien, managing director at BK Asset Management, wrote in a note to clients.
“With the fiscal cliff still in the background and the talks going no where, the Fed will want to keep every ounce of their existing stimulus in place in case Congress cannot agree to a reasonable plan by the end of the year,” she added.
Among other major currency pairs, the British pound GBPUSD +0.05% climbed to $1.6076 from $1.6067, while the Australian dollar AUDUSD -0.01% slipped to $1.0480 from $1.0486.
Against the Japanese currency, the greenback USDJPY +0.13% was changing hands for 82.36 yen from ÂĄ82.28.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau. Follow him on Twitter @MktwKumar.
