Dollar hits 14-year record peak

21/12/2016 05:54 AST

The dollar hit a 14-year high on Tuesday as the yen fell after the Bank of Japan stuck to its ultra-loose monetary policy and the euro weakened following deadly attacks in Germany and Turkey.

On Wall Street, the Dow appeared set for another run at 20,000 points, as concern after the attacks in Europe were offset by reassurance over Italy’s plan to spend up to 20 billion euros ($21 billion) to rescue its troubled banks.

On currency markets, a sense of caution after a truck ploughed into a Christmas market in Berlin, killing 12, sent the safe-haven Swiss franc towards a six-month high versus the euro and pushed the common currency firmly back below $1.04. But the dollar and rising bond yields again dominated, after the head of the Federal Reserve flagged the strength of the US jobs market in a speech to students on Monday.

That sent the greenback up almost half a per cent against a basket of major currencies to 103.65, its strongest since January 2003.

Its gains were strongest against the yen, which slid around 1 per cent after the Bank of Japan, shrugging off the yen’s recent slump, said it would keep monetary policy loose.

“The biggest impact you see from the attacks in Berlin and (Ankara) is the Swiss franc/euro,” said Societe Generale FX strategist Alvin Tan.

“But apart from that the dollar continues to be strong after we had some rather positive comments from Janet Yellen.”

Benchmark 10-year US government bond yields, which set the bar for global borrowing costs and have been rising hand-in-hand with the dollar over the last few months, were at 2.57 per cent having earlier topped 2.58 per cent.

The greenback has risen 12 per cent versus the yen since Donald Trump’s surprise presidential election victory, on his promises of increased fiscal stimulus.

The win was made official on Monday after he got the required Electoral College votes.

The Gulf Today