With the Federal Reserve expected next month to raise rates to what some US central bankers believe is at or near a neutral level, Chairman Jerome Powell is retuning his message to signal a more cautious approach on further rate hikes next year.
"Equities gained as Powell hinted of implementing fewer rate hikes when the economy is still doing well", said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
Investors are now betting the Fed is nearing a pause in hikes and eurodollar futures show the market pricing for just 25 basis points, the equivalent of one Fed increase, next year.
The Bloomberg Dollar Index sank the most in two weeks, fueling speculation its two-month rally may be over. The pound even managed to strengthen despite warnings about the dire consequences of a no-deal Brexit from the Bank of England.
The report even highlighted the Fed's own policy decisions as a risk, saying that markets globally needed to adjust to the fact of rising interest rates, and "some adjustments could occur abruptly". All told, investors surmised the Fed is likely to reduce the number of hikes or outright stop them next year. But the path after that is clouded after Chairman Jerome Powell said Wednesday rates are "just below" estimates of the so-called neutral level, which markets took to mean a softer stance than previous comments.
Arguably one of the most important factors for Gold pricesnext week will be comments from Fed Chair Powell.
Tensions over trade, the turbulent Brexit discussions and trouble in China and emerging markets could rock a U.S. financial system where asset prices are "elevated" and business credit quality may be "deteriorating", the Federal Reserve said in a first-ever report devoted to financial stability. The reading easily topped market forecasts.
Friday also marked the last trading day of November.
All eyes will now be on the Federal Open Market Committee's final gathering of this year on December 18-19 to glean further clues on what may happen.
Technology stocks posted some of the biggest gains.
Is this how much Priyanka and Nick minted from their royal wedding?
While they exchanged vows in a Christian wedding on Saturday, a traditional Hindu ceremony took place on Sunday. PETA India congratulated the newlywed couple but said that it was not a happy day for animals.
The Nasdaq 100 rose 3.2 percent and the Dow added 2.5 percent.
The S&P 500 index rose 47 points, or 1.8 percent, to 2,729.
On other economic data, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, a leading measure of U.S. home prices, reported a 5.5 percent annual gain in September, down from 5.7 percent in the previous month, according to a report released by S&P Dow Jones Indices on Tuesday.
The euro advanced 0.7 percent.
The Fed has raised its benchmark short-term rate, now in a range of 2 percent to 2.25 percent, three times this year and is expected to do so again next month.
The global platinum market will be oversupplied by around half a million ounces both this year and next, an industry report said, suggesting little respite for producers facing prices languishing near 10-year lows.
Germany's 10-year yield was steady at 0.35 percent.
Bond prices fell. The yield on the 10-year Treasury note rose to 3.06 percent.
Brent crude rose 0.6 percent to US$59.13.