FOREX-Dollar falls vs euro, up vs yen after Fed move

* Euro rallies to $1.42 on EBS, then pares gains

* Fed intends to buy $600 bln of bonds by end of Q2 2011

(Updates with dollar moves after Fed meeting, changes
byline, updates prices)

By Wanfeng Zhou

NEW YORK, Nov 3 (BestGrowthStock) – The U.S. dollar fell against
the euro but remained higher versus the yen in volatile trade
after the Federal Reserve unveiled plans to buy $600 billion in
government bonds to help stimulate the economy.

The euro briefly hit a session peak of $1.42 on trading
platform EBS immediately after the Fed’s announcement as some
investors said the total size of bond purchases was slightly
bigger than expected.

Markets were generally priced for the Fed initially to
commit to buying at least $500 billion in Treasuries over
several months.

But the euro quickly fell back as investors reassessed the
Fed’s decision to buy about $75 billion in longer-term Treasury
bonds per month until mid 2011. For details, see
[ID:nN03287174]

“I don’t think the Fed over-delivered. Strictly $75 billion
a month is less than $100 billion,” said Richard Franulovich,
senior currency strategist at Westpac in New York.

“And beyond June, there’s nothing, there no outlook. I am
slightly underwhelmed. The dollar did sell off, but I don’t
think this spike in the euro has legs,” he added.

The euro (EUR=EBS: ) last traded 0.1 percent higher at
$1.4052. It earlier hit a session peak of $1.42, the highest
level since late January.

Some analysts believe the dollar should continue to see
pressure.

“After the dust settles, with the Fed the only major
central bank with a bias toward easing makes the dollar
vulnerable going forward. Over the near-term, a dollar/euro
near $1.45 is within the realm of possibilities,” said Omer
Esiner, chief market analyst, commonwealth foreign exchange,
Washington D.C.

The dollar has lost nearly 8 percent versus a basket of
currencies since the start of September on expectations for
more monetary easing from the Fed, a move that would pressure
U.S. yields and diminish the return on dollar-denominated
assets.

The Fed announcement followed a day after the widely
expected outcome of U.S. midterm elections — where the
Republicans took control of the House of Representatives while
the Democrats were set to hang on to the Senate.
[ID:nN03266983]

The dollar rose 0.9 percent against the yen to 81.36
(JPY=EBS: ), hitting a high of 81.59 on EBS and taking out
options barriers at the 80.50 level.

The U.S. Dollar Index (.DXY: ), a measure of the greenback
versus a basket of six currencies, was flat at 76.743.

(Additional reporting by Gertrude Chavez-Dreyfuss and Julie
Haviv; Editing by Andrew Hay)

FOREX-Dollar falls vs euro, up vs yen after Fed move