U.S. dollar squeezed by cautious Fed

U.S. stocks are rising after the government reported that prices paid by consumers increased in February a sign of potentially stro

The Fed increased its benchmark interest rate (http://www.marketwatch.com/story/fed-raises-interest-rates-by-a-quarter-point-sees-two-move-moves-this-year-2017-03-15) by 25 basis points, noting that headline inflation is "moving close" to its 2% target The dot plot, a table of policymakers' projections for short-term rates, showed more unity among the central bankers about their interest-rate forecast and indicated two more hikes this year. The index was down nearly 1 percent overall for the week and 1.2 percent since the Fed raised rates on Wednesday.

CURRENCIES: The dollar slipped to 113.08 Japanese yen from 113.39 yen.

Gold and silver futures on the Multi Commodity Exchange (MCX) were trading higher in early trade on Friday on account of buying in precious metals by investors, jewellers and industries.

MSCI's all-country world stock index.MIWD00000PUS, which hit an all-time high on Thursday, was little changed on Friday, on track to end the week 1.3 percent higher. "The Dutch election result was consistent with the opinion polling, and obviously the Fed has delivered a rate hike, but in its most dovish form", said Bank of America G10 currency strategist Kamal Sharma.

The Standard & Poor's 500 index fell 4 points, or 0.2%, to 2,380 as of 11:26 a.m. EDT.

Yields on 10-year U.S. Treasuries nursed their heaviest falls since last August.

The Fed is hoping to lift rates gradually off their record lows, where they stayed for seven years following the 2008 financial crisis.

Nevertheless, since the start of the year investors have traded French government debt at a heavier discount from ultrasafe German bonds, which means they are still distrustful of polls after last year's decision by Britain to leave the European Union and Donald Trump's victory in the US, both of which came as a surprise.

Markets also reacted positively after Dutch center-right Prime Minister Mark Rutte fought off a challenge by anti-immigration, anti-European Union rival Geert Wilders to score an election win seen as a victory against populist nationalism. Sterling, which may be at the heart of the bank's concern over inflation and would benefit from any rise in interest rates, jumped by a full cent to $1.2361 and by more than half a percent to 86.83 pence per euro. The Euro Stoxx 50 Index advanced 0.9%. On the Nasdaq, 1,349 issues rose and 851 fell.

"Gold, copper and oil all rallied as the dollar dropped".

At German lender Commerzbank AG, currency analyst Antje Praefcke also said that "the euro seemed unimpressed" Thursday, but warned that the euro remains vulnerable because "political risks in the eurozone remain high with a view to the French elections".

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