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GLOBAL MARKETS-Dollar hits six-year peak vs yen, stocks rally
September 18, 2014 / 3:41 PM / in 3 years

GLOBAL MARKETS-Dollar hits six-year peak vs yen, stocks rally

* Dollar sweeps higher on diverging outlook for global rates
    * S&P 500, Dow hit fresh intraday record highs
    * Crude oil prices pressured by rising dollar

 (Adds U.S. markets open, changes dateline; previous LONDON)
    By Herbert Lash
    NEW YORK, Sept 18 (Reuters) - The dollar hit a more than
six-year peak against the yen on Thursday on data showing U.S.
jobless claims fell more than expected last week, while global
equity markets rallied after the Federal Reserve again pledged
to keep interest rates low.
    The dollar index, a gauge of the greenback's value
against six currencies, climbed to its strongest in more than
four years, supported by the Federal Reserve's interest rate
forecasts that were higher than those projected in June. 
    Markets eyed a widening policy split between the United
States and other rich nations that in the future will push U.S.
rates higher, strengthening the dollar.
    Some strategists were surprised at the extent of the
dollar's rally and felt investors have put too much credence in
the rate forecasts, instead of what Fed officials said.
    "The dollar will be in a consolidation phase in the short
term after yesterday's sharp gains," said Greg Moore, senior
currency strategist at RBC Capital Markets in Toronto. 
    "Even Janet Yellen yesterday was reluctant to commit to any
rate scenario," he said.
    The dollar rose as high as 108.96, the strongest
since August 2008, and last traded at 108.67, up 0.28 percent.
    The euro rebounded, rising 0.37 percent to $1.2912.
    Wall Street rallied, with both the benchmark S&P 500 and Dow
setting new intraday highs.
    The Dow Jones industrial average was up 92.26 points,
or 0.54 percent, at 17,249.11. The Standard & Poor's 500 Index
 was up 9.13 points, or 0.46 percent, at 2,010.70. The
Nasdaq Composite Index was up 25.08 points, or 0.55
percent, at 4,587.26.  
    In Europe, the FTSEurofirst 300 index of top
regional shares rose 0.89 percent to 1,397.43. MSCI's
all-country world index rose 0.24 percent to
428.51.
    U.S. Treasury debt prices turned down, with investors
driving some shorter-maturity yields to highs not seen since May
2011 after the Fed on Wednesday raised its forecasts for some
interest rates.
    Yields on two-year notes touched a high of 0.597
percent before settling back to 0.5767 percent on a 1/32 price
decline. That level was last seen in May 2011.
    Yields on benchmark 10-year Treasury notes were
up to 2.6308 percent on a price decline of 9/32.
    The number of Americans filing new claims for unemployment
benefits fell more than expected last week, suggesting a sharp
slowdown in job growth last month was probably an aberration.
    While other U.S. data on Thursday showed some weakness in
home building and factory activity, the underlying trend
remained supportive of solid economic growth. 
    Oil traded lower, pressured by ample supply and concern over
a weakening of demand growth in major consumer nations, as well
as by the dollar's rise.
    A stronger dollar makes dollar-priced commodities such as
oil more expensive for buyers using other currencies but tends
to weigh on oil prices.
    Brent was down 95 cents at $98.02 a barrel, while
U.S. crude was down 43 cents at $93.99 a day after
dropping on government data that showed U.S. crude inventories
rose 3.7 million barrels last week.  

 (Reporting by Herbert Lash; Editing by Dan Grebler)

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