Dollar up at 14-year pinnacle

london — The dollar surged to a near 14-year high on Thursday, clocking up a string of milestones against other top world currencies and clobbering emerging markets.

Stronger data from the world’s biggest economy underpinned the greenback’s gains, which were further amplified by thinner volumes as US traders stayed away for the Thanksgiving holiday.

The dollar pushed its way past more of last year’s peaks against the euro to hit $1.0550 in early European action, with only the March 2015 high of $1.0457 standing in the way of a drive towards parity.

The yen skidded to an eightmonth low and China’s yuan to an 8-1/2 year low, while the highly sensitive Turkish lira and Indian rupee hit new historic troughs.

“There doesn’t seem to be anything stopping US yields going higher in the near-term so I think people are going to stay on the dollar trend,” said Michael Metcalfe, head of global macro strategy at State Street Global Markets.

“The only risk to this are that the dislocations in markets outside of the US, particularly in emerging markets, get to a point where they start to feed back into concerns [for the Federal Reserve as it looks to raise interest rates],” he said.

In contrast to all the forex noise, European shares saw a broadly quiet start, with most of the main bourses edging marginally higher on gains from chemical and insurance firms.

German business confidence data showed firms remained unfazed, for now at least, by the US election win for Donald Trump and the political uncertainty currently bubbling in eurozone peers such as Italy.

However, the European Central Bank delivered an unusually downbeat message, warning that global political shifts could compound existing vulnerabilities to rising interest rates and revive worries about the eurozone’s weaker sovereigns.

“This in turn could delay much-needed fiscal and structural reforms and could in a worst-case scenario reignite pressures on more vulnerable sovereigns,” it added. —