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Forex - Dollar holds onto modest gains, but remains near 5-week trough

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The euro rose to a six-week high against the greenback and was last at $1.0751, up 0.2 percent.

"So even if we saw yesterday a reaction lowering the dollar on the back of unchanged forward guidance, the market still regards the dollar as a buy on dips as the outlook for the U.S.is actually ahead of other economies".

"At the moment, the dollar remains in correction mode, which we had fully expected", said Fawad Razaqzada, market analyst, Forex.com in London.

"Whether folks agree or disagree with the need to hike, the key here is that the Fed has signaled to markets, and importantly United States and global businesses, that it is in control and the economy is moving as expected", said Greg McKenna, chief market strategist at AxiTrader, in a note.

The dollar held onto modest gains but remained near five-week lows against other major currencies on Friday, after the release of mixed US data, although the Federal Reserve's dovish stance this week continued to weigh on the greenback.

"What's happening now is just an inverse trade against the dollar". Although there are lingering concerns about Trump's ability to implement his pro-business agenda, their enactment could cause the Fed to quicken its pace of rate increases-a negative for gold.

Rate rises lead to higher bond yields, which increase the opportunity cost of holding non-yielding bullion and tend to boost the dollar, in which gold is priced.

Dutch centre-right Prime Minister Mark Rutte fought off the challenge of anti-Islam and anti-EU rival Geert Wilders to score an election victory that was hailed across Europe on Thursday by governments facing a rising wave of nationalism.

Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.53 per cent to 839.43 tonnes on Wednesday.

Inflows into the fund so far this week have already almost erased last week's outflows.

Japanese market futures were lower than the Nikkei 225's last close at 19,577.38: Futures in Chicago were down 0.52 per cent at 19,475 and Osaka futures fell 1.05 per cent to 19,370.

The dollar dropped to a five-week low against a basket of currencies on Thursday, still reeling from the previous session, when a statement from the U.S. Federal Reserve failed to signal a much faster pace of monetary policy tightening.

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