(New throughout, changes dateline from previous SYDNEY/TOKYO)
* Dollar soars across the board after Fed raises rate projections
* Market puts aside pledge to keep rates low for ‘considerable time’
* Scotland’s independence vote next focus, sterling volatility jumps
* Swiss franc up after SNB takes no action
By Patrick Graham
LONDON, Sept 18 (Reuters) - The dollar began European trading on Thursday almost 1.5 percent higher against the yen than 24 hours earlier, after the Federal Reserve sent another shock through the global financial system by raising its projections on future interest rates.
The fallout from the Fed dominated moves on major currency markets on what could prove a momentous day for sterling, with Scots voting on whether to break up their three-century old union with the rest of the United Kingdom. The pound was unchanged but overnight implied volatility surged to almost 35 percent.
The Swiss franc also inched up against the dollar and the euro after Switzerland’s central bank took no new action to weaken its currency at a regular policy meeting.
The dollar raced to a six-year high of 108.87 yen, its strongest since September 2008 after the Fed raised its projections for rates over the next two years. Against a basket of major currencies, the greenback touched a high of 84.814 , a level not seen since July 2010 before falling back to 84.648.
“The dollar faces resistance at around 84.75 on the index, but if it clears that today we should see it go on and push higher,” said Lee Hardman, a strategist with Bank of Tokyo-Mitsubishi UFJ in London.
“The Fed clearly signalled overnight that although it is not imminent, they are increasingly confident they will raising rates next year. That should clear the way for U.S. short-term rates to rise way above those elsewhere over the next 18 months to two years and the dollar will go with them.”
The euro held steady at $1.2867, having hit a 14-month low of $1.2834 earlier on Thursday.
“The dollar buying trend against everything has a momentum of its own globally for now,” said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore. “There will be resistance into 109 and 110 (yen), but it’s pointless standing in front of the train at the moment.”
The Fed also repeated its assurance that rates would stay ultra-low for a “considerable time” once it ends a programme of bond-buying stimulus next month.
But for the end of next year, its median projection for the Fed funds rate - now effectively zero - was 1.375 percent, compared with 1.125 percent in June, while the end-2016 projection moved up to 2.875 percent from 2.50 percent.
Fed Chair Janet Yellen tried to play down the shift in a news conference after the statement was released, saying there was “relatively little upward movement in the (rate) path.”
Just hours before Scots began voting, a poll by Survation showed support for staying in the United Kingdom at 53 percent, maintaining a slender lead that has allowed the pound to recover around 3 cents against the dollar in the past week.
Still, the threat of a break-up of the UK is keeping sterling on edge. It last traded at $1.6291, steady on the day, but investors continued to buy options protecting them from volatility around the results, expected early on Friday.
That underlined that the vote has generated the biggest one-off event risk since Britain’s closely-fought 2010 parliamentary election and dealing rooms in London, unusually, will be staffed through the night into Friday morning. Hardman said the pound should hold roughly steady before that.
”We just have to wait for the results now,“ he said. ”If the polls are right then sterling should rebound tomorrow morning.
Commodity currencies came off their earlier lows but struggled to gain traction, with the Australian dollar edging up 0.1 percent on the day to $0.8968 , after hitting a six-month low of $0.8939 earlier on Thursday. (Editing by Nigel Stephenson)