It "is so mild and mechanical that it shouldn't be an issue for the longer-dated Treasury or MBS markets", said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. "But I'd be shocked if, in 2020, there haven't been some bumps along the way".
The dollar index, which tracks the greenback against six major peers is higher after upbeat US economic data gave investors reason to hope the US Central Bank will stick with its plan to hike rates.
"The latest inflation data have undoubtedly helped the case of officials arguing for waiting more than three months for the next move", said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.
The Fed decision and communique did little for long vega trades, with one-month implied volatility in euro-dollar dropping to its lowest level in nearly three years.
Meanwhile, USD/CAD advanced 0.32% to trade at 1.3287, pulling further away from the previous session's more than three-month low of 1.3163.
Meanwhile, Washington remained in focus as the special counsel investigating Russia's interference in the 2016 election was said to be planning to interview two top US intelligence officials about whether President Donald Trump sought their help to get the Federal Bureau of Investigation to back off a related probe of former National Security Adviser Michael Flynn. Year-on-year, the New Zealand economy grew 2.5%, disappointing forecasts for a 2.7% growth rate.
The trade-weighted index rose to 77.58 from 77.48 yesterday. The Fed's signals for the rest of 2017 will be vital for US Dollar exchange rate movement going forward. The process could start "relatively soon", Fed Chair Janet Yellen said.
The US central bank lifted the benchmark lending rate by a quarter percentage point and announced it would begin cutting its huge holdings of bonds and securities this year. Thomson Reuters CRB index tumbled to 14-month lows, having fallen nearly 12 per cent from this year's high hit in January.
After hitting 2017 highs of 1.1283 last week, EUR/USD spent the weekend at the level of 1.1195.
Economists say the weakness in inflation, if sustained, could put further monetary tightening in jeopardy. "But that view will be tested in coming months", he added.
The Commerce Department reported that retail sales fell 0.3 percent in May due to a steep decline in automobile purchases as well as appliance and electronics sales.
Optimism about the global economy also underpinned European equities where the pan-European STOXX 600 (.STOXX) was up 0.6 percent, led by industrials and financials. Retail inflation, as measured by the consumer price index (CPI) slowed to 2.18% in May from 2.99% a month ago as food prices fell from their year-ago level.
In Canada, data showed that manufacturing sales increased by 1.1% in April, beating expectations for a 0.7% rise, after a revised 0.8% gain the previous month.