(Updates prices, adds analyst comments; changes byline,
dateline, pvs LONDON)
* Euro skids to roughly 14-year low of $1.0396
* Dollar index heads for biggest daily percentage gain in 6
* Dollar hits nearly 10-1/2 month high vs yen of 118.66 yen
By Sam Forgione
NEW YORK, Dec 15 The U.S. dollar surged to its
highest level in 14 years against a basket of major currencies
on Thursday on anticipation of a more hawkish Federal Reserve
and a boost in U.S. economic growth under President-elect Donald
The dollar index, which measures the greenback against a
basket of six major rivals, jumped as much as 1.5 percent to a
roughly 14-year high of 103.320. It was on track for its biggest
daily percentage gain in nearly six months.
The dollar's gains, which included a roughly 14-year high
against the euro and a nearly 10-1/2-month high against the yen,
came a day after the Fed raised interest rates for the first
time in a year and signaled it was likely to hike three more
times in 2017, up from the two increases forecast at the central
bank's September meeting.
A 25-basis-point rate hike had been widely expected by
financial markets, but the signal that rates were likely to rise
at a faster-than-expected pace surprised investors and continued
to fuel gains in the dollar on Thursday.
"There is an expectation that there is going to be a strong
economy next year with the Fed raising rates, and that is being
reflected in the dollar's strength globally," said Douglas
Borthwick, managing director at Chapdelaine Foreign Exchange in
Analysts said the dollar was also gaining on expectations
that the incoming Trump administration's economic plans would
complement the Fed's pace of rate increases and boost the dollar
The dollar was last up 1.14 percent against the yen
at 118.35 yen after rising as much as 1.4 percent to 118.66 yen,
its highest level since early February. The euro was down 1.08
percent at $1.0421 after falling as much as 1.3 percent to
$1.0396, its lowest since early January 2003.
Barclays expects the euro to reach parity with the dollar by
the third quarter of 2017 and then to fall below $1, while JP
Morgan Asset Management expects the two currencies to become
equal in the first quarter of next year.
"The only thing that can change the market view is if the
new administration falls through on its promised policies," said
Sireen Harajli, currency strategist at Mizuho Corporate Bank in
New York, in reference to the view of a stronger dollar heading
into next year.
The dollar hit a more than one-year high against the Swiss
franc of 1.0324 francs.
(Reporting by Sam Forgione; additional reporting by Jemima
Kelly in London; Editing by Meredith Mazzilli)