* Dollar boosted after Fed ups 2017 rate hike projections
* Dollar/yen hits 10-mth high, euro/dollar stoops to 21-mth
* Focus on if further rise in USD prompts warning by
By Shinichi Saoshiro
TOKYO, Dec 15 The dollar hovered near a 14-year
peak against a basket of major currencies on Thursday, receiving
a major boost after the Federal Reserve increased the number of
projected interest rate hikes for 2017.
In a closely watched decision on late Wednesday, the U.S.
central bank raised the target federal funds rate by 25 basis
points to between 0.50 percent and 0.75 percent.
The rate hike was fully expected by the financial markets
and the real mover came from the Fed signalling three hikes in
2017, up from around two flagged at its September policy
The dollar index stood at 102.17 after rising to
102.350 late on Wednesday, its highest since January 2003. The
euro was down 0.2 percent at $1.0513 after sliding
overnight to $1.0497, a trough not seen in 21 months.
The greenback surged more than 1.5 percent overnight to a
10-month high of 117.400 yen and was last at 117.190.
The dollar's push above 117 yen came after Fed Chair Janet
Yellen said that the rate increase was a "very modest adjustment
in the path of the fed funds rate." This was seen by investors
as an endorsement of the Fed signalling a faster pace of rate
increases in 2017.
"The rate hike projections for 2017 being increased to three
shows that Fed's board is having to factor in the impact of
Trump's policies," said Junichi Ishikawa, senior FX strategist
at IG Securities in Tokyo.
The Fed's policy decision came as U.S. president-elect
Donald Trump's administration takes over with promises to boost
growth through tax cuts, spending and deregulation.
"The focus now falls on U.S. equities and whether they can
withstand the surging dollar and Treasury yields. If not, we
could see the Trump camp warn against the appreciation of the
dollar," Ishikawa said.
Following the Fed's move, the 10-year Treasury note
yield vaulted to its highest level since September
2014, coming close to 2.6 percent, while Wall Street shares fell
the most in two months.
Treasury yields, a key driver of the dollar's recent surge,
have been climbing relentlessly since November on prospects of
Trump administering reflationary policies through massive fiscal
The Australian dollar was down 0.1 percent at $0.7400
, adding to losses of 1.2 percent suffered the previous
Sterling was down 0.3 percent at $1.2524 after
hitting a two-week low of $1.2515.
(Editing by Sam Holmes)