Dollar mixed following Fed's modest measure

Agence France Presse

Posted at Aug 11 2010 11:53 AM | Updated as of Aug 11 2010 07:53 PM

TOKYO - The dollar remained mixed on Wednesday as the Federal Reserve moved ahead with modest measures to help stimulate the US economy, after figures showed recovery from recession has slowed.

The dollar fell slightly to 85.33 yen in Tokyo morning trade from 85.38 in New York late Tuesday. The euro fell to $1.3102  from $1.3177 and to 111.81 yen from 112.60.

"Tokyo took over the dollar-selling momentum from New York on the (Fed's) statement," said Tomohiro Nishida, a dealer at Chuo Mitsui Trust Bank.

"The pressure is now subsiding as players failed to test a further low of the dollar early in the morning," Nishida said, adding that "another dip of the dollar in the near term" was possible.

The greenback lost ground on the purchasing of US treasury bonds after the Federal Open Market Committee issued a statement vowing to renew crisis-era investments that would pump cash into the economy.

Maintaining interest rates at historic lows in the face of slow growth and high joblessness, members of the Fed's Federal Open Market Committee said proceeds from the central bank's maturing mortgage-bond portfolio would be used to buy long-term Treasury securities, essentially resuming crisis-era spending.

Japanese Finance Minister Yoshihiko Noda said he would keep watching foreign exchange moves closely following the US Federal Reserve's decision.

"Currency moves after the Fed's decision appear a little one-sided," Noda told reporters, according to Dow Jones Newswires. "Excessive foreign exchange moves are bad for the economy, so I will keep closely monitoring the market."

The market largely ignored a smaller-than-expected 1.6 percent gain in Japan's core machinery orders in June released early Wednesday, indicating there will be no sharp recovery in corporate capital spending in the near term.

Dealers say trading is expected to be sluggish for the rest of the week due to the annual Japan "Obon" summer holiday starting later this week. Tokyo financial markets will be open as usual.