Dollar falls versus euro after European auctions; mixed against others ahead of Fed decision

Dollar mixed ahead of key Fed announcement

NEW YORK — The dollar was mixed Tuesday against other major currencies as traders looked toward a key midafternoon announcement from Federal Reserve policymakers.

In mid-morning trading in New York, the euro rose to $1.3126 from $1.3062, while the British pound was unchanged at $1.5545. The dollar slipped to 85.34 Japanese yen from 85.77 yen.

Debt auctions in Ireland, Spain and Greece went well and that helped boost the euro ahead of the announcement expected from the Fed at 2:15 p.m. ET.

Revisions to the Fed’s economic outlook and changes in monetary policy often have an immediate impact on dollar trading, as well as a long-term effect on the currency’s value.

Many analysts say the Fed is unlikely to say Tuesday that it will start a program of buying Treasury and mortgage bonds to drive down interest rates and stimulate the economy.

Federal Reserve Chairman Ben Bernanke had said last month that the economy would have to get significantly worse before the Fed took further action, and some recent economic data has seemed marginally better than reports earlier this summer.

The dollar has fallen 2.5 percent against a group of six actively traded currencies since late August.

Lower interest rates often weigh on a currency as investors transfer funds to countries where they can earn higher returns on their bets.

In other trading Tuesday morning, the dollar fell to 1.0032 Swiss francs from 1.0061 Swiss francs, but gained to 1.0303 Canadian dollars from 1.0287 Canadian dollars.