The dollar index, which tracks the greenback against a basket of six trade-weighted peers, retreated 0.1 percent to 100.26. It hit a five-week low yesterday, and is down almost 1 percent for the week.
The dollar was steady at 113.32 yen JPY= but is on track to post a 1.2 percent loss for the week.
While the Fed raised interest rates by 25 basis points on Wednesday, it kept to its original forecast of three rate hikes this year, disappointing investors who were expecting four.
U.S. Treasury yields, which slid after the decision, staged a recovery yesterday and continued to rise today.
The 10-year yield was at 2.5402 percent in early trade, from its last close of 2.524.
“The story in global markets over the past 24 hours has centered on a broad-based tightening of monetary policy conditions (and the perception of future tightening),” Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 percent, set to end the week with a 3.3 percent gain, its biggest weekly increase since September.
Japan’s Nikkei .N225 lost 0.4 percent, and is poised for a 0.5 percent loss for the week.
MSCI’s all-country world stock index which hit an all-time high yesterday, was little changed on Friday, on track to end the week 1.3 percent higher.
But European shares were upbeat following the election victory of Dutch Prime Minister Mark Rutte, who defeated anti-immigration, anti-European Union rival Geert Wilders.
The euro EUR=EBS touched its highest level in 5-1/2-weeks today. It was fractionally higher at $1.07715 in early trade, after two days of strong gains, and set to end the week up 0.9 percent.
Sterling GBP=D4 inched lower to $1.235 early today. Yesterday, it jumped to a two-week high after a decision by the Bank of England to hold interest rates steady, while hinting it might raise them soon.
In commodities, oil prices rose slightly, supported by a weaker dollar.
U.S. crude rose 0.25 percent to $48.87 a barrel after losing 0.2 percent yesterday. It remains set to end the week 0.8 percent higher. U.S. crude touched its lowest level in more than three months early this week on concerns about a supply glut in the United States, but data on Wednesday showing a small decline in U.S. stockpiles helped lift prices.
Gold inched 0.1 percent lower to $1,225.14 an ounce, as investors took profits after strong gains this week on the Fed’s more moderate monetary policy stance. – Reuters