In Asian trading, the U.S. Dollar stayed above a 1-month trough against a weighted basket of major currencies despite the announcement from the Federal Reserve yesterday that they would extend the Operation Twist program and would consider additional easing if economic conditions warranted. As reported at 1:11 p.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 81.588 .DXY, near 81.186 .DXY, the 1-month low struck earlier this week. The U.S. Dollar moved higher against the Euro, with the EUR/USD pair trading at $1.2672, a gain of 0.3%; on Wednesday the pair had traded as high at $1.2744. The U.S. Dollar steadied against the Japanese Yen, with the USD/JPY pair trading at 79.57 Yen.
Analysts say that the greenback would have been considerably softer had the Fed instead announced an outright QE3, which few analysts but many more investors, had expected. Operation Twist will be expanded by $267 billion and will end later this year; many analysts who had correctly predicted its extension missed the mark on the amount, as most expected it would be increased by only $200 billion. QE3 is still a possibility in the near future, however, as the labor situation in the U.S. is still dire and the economic situation fragile.