Investing.com - The dollar surged to 14-year highs against the other major currencies on Thursday after the Federal Reserve hiked interest rates and signaled it expects to raise rates more quickly than previously anticipated in 2017.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.34% at 102.39. The index hit highs of 102.62 earlier, the most since January 2003.
Wednesday’s rate was largely priced in by markets, but the dollar surged after the U.S. central bank predicted it would raise interest rates three times in 2017, up from the two hikes predicted in September.
Higher rates typically boost the dollar by making dollar assets more attractive to yield-seeking investors.
The dollar hit 10-month highs against the yen, with USD/JPY last up 0.68% at 117.8.
The euro was last down 0.31% at 1.0501 after falling as low as 1.0469 overnight, a level not seen March 2015.
The euro found some support after data showing that euro zone private sector output maintained a robust pace of expansion at the end of the year as a manufacturing upturn offset a slowdown in the service sector.
The pound was also lower against the greenback, with GBP/USD down 0.29% at 1.2528 ahead of the Bank of England’s interest rate decision later in the day. The BoE was widely expected to leave rates on hold.
The Australian and New Zealand dollars were lower, with AUD/USD down 0.16% to 0.7393 and NZD/USD sliding 0.51% to 0.7079.