Investing.com - The dollar rallied to fresh six year highs against the yen on Thursday after the Federal Reserve offered fresh guidance on its plans to raise interest rates, and was close to 14 month highs against a basket of major currencies.
USD/JPY hit highs of 108.86, the strongest level since September 2008 and was last up 0.27% to 108.63.
Wednesday’s Fed statement reiterated that it expects rates to remain on hold for a "considerable time", after its bond purchasing program ends, but it outlined in more detail how it will start to raise short term interest rates when the time comes.
The Fed cut its monthly asset purchase program by another $10 billion, keeping the program on track to finish next month.
The yen remained under heavy selling pressure after data on Thursday showed that exports fell in August and another report showed that business confidence deteriorated this month.
The weak data added to concerns over the outlook for the faltering economy and fuelled expectations for additional easing measures from the Bank of Japan in the coming months.
EUR/USD was up 0.14% to 1.2877 after falling to fresh 14-month lows of 1.2833 overnight.
The pound posted modest gains, with GBP/USD rising 0.21% to 1.6309 as investors awaited the outcome of Scotland’s closely watched independence referendum.
Sterling found support after data on Thursday showed that U.K. retail sales rose 0.4% in August in line with forecasts.
The dollar was lower against the Swiss franc, with USD/CHF sliding 0.39% to 0.9375 off the more than one year highs of 0.9432 struck earlier in the session.
The franc firmed up after the Swiss National Bank refrained from taking steps to weaken the currency at its meeting earlier Thursday, despite concerns over what it called the “deteriorating” economic outlook.
Switzerland’s central bank kept its interest rate target unchanged at zero to 0.25%. It also kept the exchange rate floor unchanged at 1.20 francs per euro and reiterated that it was prepared to defend the level if necessary.
EUR/CHF was trading at 1.2078 following the announcement, still down 0.21% for the day but off lows of 1.2066 struck ahead of the SNB statement.
The New Zealand dollar was boosted after data showed that the economy grew 0.7% in the second quarter, beating expectations of 0.6% growth.
NZD/USD was up 0.33% to 0.8123, recovering from the six month trough of 0.8076 struck overnight.
AUD/USD was steady near six month lows at 0.8963, while USD/CAD was little changed at 1.0998.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 84.71, close to highs of 84.90, the strongest level since July 2010.