(Updates prices, milestones)
* Yellen's upbeat comments support dollar
* Euro skids to new 14-year lows
* Yen skids after BOJ keeps policy on hold
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, Dec 20 The dollar hit a fresh 14-year
high on Tuesday, boosted by upbeat comments from Federal Reserve
Chair Janet Yellen that kept alive market expectations for
swifter U.S. interest rate hikes next year than had been
The greenback climbed broadly but its gains were strongest
against the yen, which slid as much as 1 percent after the Bank
of Japan kept monetary policy unchanged.
On Monday the yen had surged along with fellow safe-haven
the Swiss franc after deadly incidents in Turkey and Germany.
Both currencies have since given up those gains.
Yellen said late on Monday that the U.S. labour market had
improved to its strongest in almost a decade, suggesting wage
growth is picking up.
The Fed chair did not mention monetary policy, but some
analysts said the fact that she did not pour cold water on
investors' moves to price in a possible three rate hikes in 2017
after the Fed's policy statement and rate rise last week was a
catalyst for dollar strength.
"She didn't use the opportunity to take the market back from
being overly hawkish," said UBS currency strategist Constantin
Bolz, in Zurich. "Maybe there were some people who...thought
they would hold off from further dollar longs until she spoke,
in case she were to row back."
The dollar rose almost half a percent against a basket of
major currencies to 103.65, its strongest since January
The euro fell half a percent to $1.0352, once again
opening up the door to a move to parity with the dollar.
The greenback was also within sight of a 10-1/2-month high
of 118.66 yen touched last week, at 118.24 yen.
Expectations that U.S. President-elect Donald Trump's
administration will go ahead with tax cuts and fiscal spending,
leading to higher U.S. growth and inflation, have lifted U.S.
bond yields and the dollar in the past six weeks, in what has
become known as the Trumpflation trade.
"The market is still playing this prospect of (policy)
normalization and, as long as this is the case, the dollar will
remain strong or even appreciate a little further," said
Commerzbank currency strategist Thu Lan Nguyen, in Frankfurt.
Analysts said the yen was the most obvious play against the
dollar in the Trumpflation trade because the Bank of Japan is
the central bank that looks furthest away from normalising its
The BOJ on Tuesday affirmed its twin targets of minus 0.10
percent interest on some excess reserves and a zero percent
10-year government bond yield.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Hideyuki Sano in Tokyo; Editing by