The Fed added $45 billion a month in Treasury purchases to the existing $40 billion MBS program in Wednesdays decision. The fresh funds will replace Operation Twist, which expires at year-end.
After the announcement the US dollar fell broadly. The euro touched 1.3097 and the Australian dollar hit 1.0586. Despite the broad anti-dollar sentiment, USD/JPY continued to rise, hitting the highest since March. That could be a sign of willingness to buy yen crosses ahead of Sundays election.
The Fed had largely telegraphed the decision but there was some speculation that purchases would be less than $45 billion. Another interesting development was the inability of gold to rally despite a weak dollar and additional printing. Gold momentarily rose to $1723 shortly after the decision but has plunged back down to $1709.
Bernanke held a press conference after the decision and the Fed lowered its economic forecasts but there was nothing surprising. Late in the day, risk trades pares some of their losses.
Continued consolidation has been the theme in early Asia-Pacific trading and that is likely to continue. Australia will be in focus with Westpac consumer confidence at 2330 GMT. The consensus estimate is for a 4.1% decline. A half hour later the Melbourne Institute releases inflation expectations; the prior reading was +2.2%.
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