December 20, 2016 / 3:31 PM / 8 months ago

FOREX-Dollar touches 14-year high; yen falls after BOJ

* Yen falls after BOJ as expected leaves policy unchanged
    * Dollar rises with U.S. bond yields after Yellen's remarks
    * Euro slips to lowest since January 2003 versus dollar
    * Turkish lira recovers after Russian envoy gunned down in
Ankara

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, Dec 20 (Reuters) - The dollar climbed to a 14-year
high on Tuesday after Federal Reserve Chair Janet Yellen's
comments about the labor market reinforced the notion of a
faster pace of U.S. interest rate hikes next year than had been
expected.
    The greenback strengthened against major currencies with the
rise in U.S. Treasury yields after Yellen said on Monday that
the U.S. labor market was more robust than it had been in almost
a decade, suggesting wage growth is picking up. 
    The dollar rally and bond market selloff since the Nov. 8
U.S. election have also been stoked by bets that U.S.
President-elect Donald Trump's administration would cut taxes
and increase fiscal spending, which would result in higher U.S.
growth and inflation.
    "The dollar and bonds have been trading in lockstep," said
Ellis Phifer, senior market strategist at Raymond James in
Memphis, Tennessee. "There are still concerns spending will
increase and more debt supply will be on its way."
    The dollar index, a gauge of the greenback's value
against a basket of currencies, was up 0.4 percent at 103.52
after hitting 103.65, its highest since December 2002.
    The benchmark 10-year Treasury yield was up more
than 4 basis points at 2.583 percent. 
    The dollar rebounded against the yen after the Bank
of Japan left monetary policy unchanged as expected, supporting
the view that it is the major central bank furthest away from
normalizing its monetary policy. 
    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. 
    The greenback was up 0.9 percent at 118.17 yen, within sight
of a 10-1/2-month high of 118.66 yen set last week.   
    On Monday, the yen jumped on safe-haven demand following
deadly attacks in Turkey and Germany.  
    The Turkish lira gained 0.4 percent at 3.5174 liras
per dollar, reversing about half of Monday's loss resulting from
the killing of a Russian ambassador in Ankara. 
    The euro fell 0.3 percent to $1.0375 after hitting
$1.0350, its weakest versus the greenback since January 2003,
Reuters data showed.
========================================================
    Currency bid prices at 10:00AM (1500 GMT)
 Description      Last           U.S. Close  Pct Change
                                  Previous   
                                  Session    
 Euro/Dollar      $1.0368        $1.0402     -0.33%
 Dollar/Yen       118.0700       117.0700    +0.85%
 Euro/Yen         122.42         121.76      +0.54%
 Dollar/Swiss     1.0305         1.0268      +0.36%
 Sterling/Dollar  1.2319         1.2398      -0.64%
 Dollar/Canadian  1.3396         1.3407      -0.08%
 Australian/Doll  0.7227         0.7245      -0.25%
 ar                                          
 Euro/Swiss       1.0687         1.0683      +0.04%
 Euro/Sterling    0.8414         0.8389      +0.30%
 NZ               0.6900         0.6927      -0.39%
 Dollar/Dollar                               
 Dollar/Norway    8.7069         8.6842      +0.26%
 Euro/Norway      9.0290         9.0333      -0.05%
 Dollar/Sweden    9.3841         9.3876      -0.23%
 Euro/Sweden      9.7313         9.7536      -0.23%
    

    
 (Additional reporting by Jemima Kelly in London; Hideyuki Sano
in Tokyo; Editing by Hugh Lawson and Lisa Von Ahn)

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