The dollar was on the defensive on Thursday after suffering its worst drubbing in five months, while bonds celebrated a comeback on speculation the Federal Reserve might not tighten US policy as aggressively as previously thought.

Moves in Asian share markets were mostly minor with Japanese markets closed for a holiday and the United States off for Thanksgiving. Spreadbetters pointed to a slightly easier opening for the major European bourses.

MSCI's broadest index of Asia-Pacific shares outside Japan eked out a fresh 10-year peak with a rise of 0.15 per cent, as did Hong Kong's main index.

The dollar's rout came after minutes of the Fed's last meeting showed “many participants” were concerned inflation would stay below the bank's 2 per cent target for longer than expected.

That echoed comments from Fed Chair Janet Yellen that she was uncertain about the outlook for inflation and led markets to pare back pricing for more hikes next year.

While a move in December to between 1.25 and 1.5 per cent is still almost fully priced in, Fed fund futures rallied to show rates at just 1.75 per cent by the end of next year.

“The US dollar was already staggering into Thanksgiving when the FOMC minutes gave it another shove,” said Sean Callow, a senior currency analyst at Westpac. “The FOMC seems to be increasingly uneasy about “ongoing softness” in inflation.”

“Investors can be forgiven for wondering why they should buy more US dollars if we are heading into a “Powell pause” in the first half of 2018,” he added, referring to newly appointed Fed Chair Jerome Powell.

Bonds rally broadly

Against a basket of currencies, the dollar was huddled at 93.184, having shed 0.75 per cent overnight.

The euro was enjoying the view at $1.1834 after climbing from $1.1731 on Wednesday. The dollar also crumbled to 111.27 yen, near its lowest since September 20. The overnight move was the largest single-day fall against the yen since May.

The Fed's dovish turn helped break the inexorable sell off in short-term US Treasuries, with yields on the two-year note falling almost five basis points to 1.727 per cent. That was the sharpest daily drop since early September.

The rally spilled over into Asia, where Australian 10-year bond yields fell to their lowest since June and dealers expected European bonds to follow as well.

Wall Street had been an oasis of calm in comparison with the Dow off 0.27 per cent, while the S&P 500 lost 0.08 per cent and the Nasdaq added 0.07 per cent.

Verizon and AT&T rose 2.0 per cent and 1.6 per cent, respectively on bets they will benefit from the US government's plan to rescind net neutrality rules put in place by the Obama administration.

Commodities were buoyed by the dive in the dollar, with gold up at $1,290.02 an ounce having added 0.9 per cent overnight.

Oil prices paused after hitting their highest in more than two years after the shutdown of one of the largest crude pipelines from Canada cut supply to the United States.

US crude futures eased back 12 cents to $57.90 a barrel, after jumping 2 percent on Wednesday to ground last trod in mid-2015. Brent crude dipped 18 cents to $63.14 a barrel

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