Dollar slips back against euro after Fed-fuelled gains

The dollar fell back against the euro Thursday but firmed against the yen, as markets assessed the Federal Reserve's outlook for US interest rates.

The day before, the dollar had rallied against both main rivals and the Dow reached a fresh record high after the US central bank kept alive the chance of a December increase in American borrowing costs.

"US futures are marginally lower and the dollar is paring gains ahead of the open on Wall Street," said Oanda analyst, Craig Erlam. 

He said there was "early profit taking after the Fed unexpectedly maintained its hawkish outlook for interest rates on Wednesday."

Fed chief Janet Yellen said the world's biggest economy was "performing well". It also emerged from the closely-watched meeting that most members of the policy board wanted to lift borrowing costs by December.

The central bank also announced it would next month begin cutting back on its holdings of bonds and other assets built up as part of a scheme to keep rates low and steer the economy through the global financial crisis a decade ago.

Yellen said policymakers would react accordingly to any negative impacts on the economy, adding that persistently low inflation would likely come to an end.

She also said if prices rose too quickly, the bank would be able to lift rates more rapidly. 

- Gains against yen -

While the dollar slid back against the euro, it rose further versus the yen after the Bank of Japan decided against altering its ultra-loose monetary policy.

The dollar's gains come after a run of losses in recent months as tepid inflation and a lack of movement on US President Donald Trump's economic agenda in Congress had seen investors bet on no more rate hikes this year.

The jump in the dollar against the yen boosted Japanese exporters, which helped the Nikkei index close 0.1-percent higher Thursday.

Shares in Toshiba meanwhile retreated as its US partner Western Digital vowed to block an $18-billion deal that will see the Japanese firm sell its key chip business to a consortium led by US investor Bain Capital and including Apple and Dell.

The deal, announced by Toshiba on Wednesday, is seen as crucial to the Japanese firm's survival.

In Europe, shares in Germany's second-largest lender Commerzbank leapt as rumours that the government might soon sell off its stake set financial circles abuzz.

The bank's stock briefly added more than 5.0 percent, but was showing a gain of 4.2 percent by 1030 GMT, trading at 11.29 euros. It topped the DAX index of German blue-chip shares.

On oil markets, both main contracts dipped following a rally of nearly two percent on Wednesday. Data showed US petrol stockpiles have fallen to a 22-month low and there is speculation that Nigeria and Libya will join the OPEC-Russia production cuts.

Elsewhere, the World Trade Organization upped its forecast for global trade growth in 2017 on stronger-than-expected demand for merchandise in Asia and North America. 

A projection of 2.4-percent growth has been boosted to 3.6 percent, the WTO said.

- Key figures around 1030 GMT - 

London - FTSE 100: UP 0.1 percent at 7,278.4 points

Frankfurt - DAX 30: UP 0.3 percent at 12,606

Paris - CAC 40: UP 0.5 percent at 5,268.9

EURO STOXX 50: DOWN 0.1 percent at 3,528.11

Tokyo - Nikkei 225: UP 0.1 percent at 20,347.48 (close)

Hong Kong - Hang Seng: DOWN 0.1 percent at 28,110.33 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,357.85 (close)

New York - DOW: UP 0.2 percent at 22,412.59 (close)

Euro/dollar: UP at $1.1915 from $1.1898 at 2100 GMT

Dollar/yen: UP at 112.44 yen from 112.15 yen

Pound/dollar: UP at $1.3499 from $1.3495

Oil - Brent North Sea: DOWN 29 cents at $56 per barrel

Oil - West Texas Intermediate: DOWN 28 cents at $50.41