World shares and risk assets rallied and the dollar backed off highs on Thursday, after the Federal Reserve flagged a rate hike next month, but also an intention to take things slow and steady after that.
The pick-up in risk sentiment combined with the dip in the dollar .DXY gave commodities a reprieve from recent selling, with oil and gold inching higher.
European stocks also opened strongly with the FTSEurofirst 300 .FTEU3 pushed to a three-month high by more than 1 percent gains in London .FTSE, Frankfurt .GDAXI and Paris .FCHI, after Japan's Nikkei .N225 had hit a similar peak in Asia.[.T]
Minutes of the Fed's last policy meeting showed most members were ready to sanction the bank's first rise in rates in almost a decade in December as long as further moves then depended on the economy continuing to perform well.
Bond markets also seemed to get the message that the Fed was in no rush with rates with longer-term debt outperforming and the yield curve flattening noticeably. While two-year yields rose 3 basis points, those on 30-year paper actually dipped a basis point.
Yields were also lower across most of Europe and Asia. The premium offered by U.S. two-year debt over its German counterpart yawned out to 124 basis points, the fattest margin since 2006 and a positive for the dollar.
However, being long dollars has been a very crowded trade and investors decided to book some profits in the wake of the Fed minutes. Against a basket of currencies .DXY the dollar dipped 0.4 percent and away from a seven-month peak.
The euro edged up to $1.0682 EUR= and off a seven-month trough around $1.0615. The dollar also eased against the yen to 123.25 JPY=, after touching a three-month peak of 123.67.
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