By William L. Watts and V. Phani Kumar, MarketWatch
FRANKFURT (MarketWatch) — The U.S. dollar slipped versus most major rivals Wednesday as traders expected the Federal Reserve to announce a further boost to its stimulus efforts when the central bank’s policy-making panel concludes its meeting later in the day.
The ICE dollar index DXY -0.08% , which measures the greenback’s performance against a basket of six major global rivals, fell to 79.982, down from 80.061 in North American trade late Tuesday.
“Despite being billed in many quarters as the QE4 release, the Fed’s decision has surprisingly not really featured on investors’ radars over the last few weeks. Even though the dollar has softened, and it still weakens if the market is ‘risk on’, the main drivers have largely been external in nature,” said Geoffrey Yu, currency strategist at UBS.
The euro EURUSD +0.2353% rose to $1.3037 from $1.3007 late in North America on Tuesday.
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Economists expect the Fed to announce it will buy U.S. Treasurys worth $45 billion a month to replace Operation Twist—its existing program to buy longer-maturity bonds while selling an equal amount of short-term securities, which expires at the end of the year.
While there might not be a huge reaction to the Fed’s announcement of such an expansion of its quantitative easing, one should “look for a sizable negative reaction if the Fed either does a smaller size, or delays the program until the New Year,” said Stan Shamu, strategist at IG Markets.
Among other major currency pairs, the British pound GBPUSD +0.1056% edged up to $1.6129 and the Australian dollar AUDUSD +0.1047% was slightly higher at $1.0550. Against the Japanese currency, the dollar USDJPY +0.7136% was fetching 82.84 yen, up from ¥82.28.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt. Follow him on Twitter @wlwatts.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau. Follow him on Twitter @MktwKumar.
