* Dollar hits loftiest levels since 2003 vs euro, currency
* Yen plumbs weakest levels since February
* Sterling wallows at three-week lows as BoE holds steady
* Dollar hits 6-year high vs Swiss franc as SNB keeps
By Lisa Twaronite and Yuzuha Oka
TOKYO, Dec 16 The dollar held hefty gains
against major currencies on Friday, after scaling 14-year highs
against the euro and a broader basket of currencies as markets
repositioned for a faster pace of rate rises by the Federal
Reserve over the next year.
The dollar has been on a tear since the Nov. 8 election of
Donald Trump, whose administration is expected to embark on
inflation-stoking stimulus policies including tax cuts and
On Wednesday, the Fed raised interest rates by 25 basis
point as widely expected, and also tipped three more hikes in
2017, instead of the previously projected two.
Taking the cue from the Fed, the 10-year Treasury note
yield rose above 2.6 percent on Thursday to its
highest level since September 2014.
Widening U.S.-Japan interest rate differentials boosted the
dollar against the yen, sending it to a 10-1/2-month high of
118.66 yen on Thursday. The dollar last stood at 118.20 yen
, gaining 2.5 percent for the week.
"Toward the year-end, it's 120, here we come!" said Kaneo
Ogino, director at foreign exchange research firm Global-info Co
"There are some Japanese commercial accounts that were
caught by surprise by the dollar's rise after Trump's election,
and still have cover their dollar positions, and are now
recalculating their internal expectations for dollar/yen for
next year," he said.
The yen has fallen 11 percent against the dollar since Trump
won the election last month, eclipsing the 10 percent slide in
the Mexico peso to become the worst performing major
currency in that period.
U.S. inflation data released on Thursday showed consumer
prices moderated in November, but the underlying trend continued
to point to firming inflation pressures amid rising rents, which
could support more interest rate increases from the Fed next
Fed funds futures showed investors were pricing in a 25
percent chance for tightening by the Fed's March meeting, and a
75 percent probability for a June rate increase.
The dollar index, which tracks the greenback against a
basket of six major rival currencies, stood tall at 103.140
. The index rose to a 14-year high of 103.560 on Thursday,
having gained 1.2 percent on day, its biggest daily percentage
gain in nearly six months. For the week, it was up 1.6 percent.
The euro was little changed at $1.0427, after
plumbing $1.0366 on Thursday, its lowest since January 2003. It
was down 1.4 percent so far for the week.
"The euro's decline has picked up momentum after a break of
key support level around $1.05," said Yukio Ishizuki, FX
strategist at Daiwa Securities in Tokyo.
"The euro is likely to be volatile as the markets closely
watch how low the currency would drop," he said.
Sterling licked its wounds after sinking to a three-week low
against the dollar overnight. It was down 0.1 percent at $1.2405
after slipping to a three-week low of $1.2378 on
Thursday. The currency was down 1.4 percent for the week.
The Bank of England said on Thursday that sterling's strong
performance over the past month could soften an expected surge
in British inflation next year, as its policymakers voted
unanimously to keep interest rates unchanged at a record low
BoE officials noted sterling had appreciated by over 6
percent since its latest forecasts in November.
The Swiss National Bank also kept its interest rates at
record lows on Thursday, citing increased global uncertainty in
the wake of the U.S. presidential election and upcoming votes
SNB introduced negative interest rates in January 2015 to
weaken the Swiss franc and bolster the country's exports.
The dollar slightly eased against the Swiss franc after
hitting a six-year high of 1.0344 francs on Thursday. The
greenback was last down 0.1 percent at 1.0295 francs.
(Reporting by Tokyo markets team; Editing by Richard Pullin &