On Thursday, the US dollar surged in early European trading, posting a new 24-year high against the yen. This happened after the Federal Reserve’s hawkish interest-rate projections contrasted with the Bank of Japan’s dovish stance.

At 03:55 ET (07:55 GMT), the Dollar Index, tracking the greenback against a basket of six other currencies, traded 1 per cent higher at 111.460, having earlier increased as high as 111.79 for the first time since mid-2002.

On Wednesday, the US central bank increased rates by 75 basis points, but it also indicated that its policy rate would rise by 4.4 per cent by year-end and top out at 4.6 per cent by the end of 2023. Suggests interest rates will ascend higher and stay elevated for longer than the markets had previously priced.

USD/JPY increased 1.1 per cent to 145.56, ascending past the key 145 level and reaching its highest level since August 1998. On the other hand, EUR/USD fell 0.2 per cent to 0.9817, just off a 20-year low of 0.9809. GBP/USD dropped 0.3 per cent to 1.1231, just off a 37-year low of 1.1221 ahead of the Bank of England’s policy announcement later in the day.

The risk-sensitive AUD/USD dropped 0.7 per cent to 0.6584, its lowest since mid-2020, while USD/CNY increased 0.6 per cent to 7.0899, hitting an over two-year low despite a strong daily midpoint fix by the People’s Bank of China.

USD/CHF declined 0.1 per cent to 0.9653, with the Swiss National Bank also expected to aggressively hike interest rates later Thursday, likely ending the decade-long experiment with a negative interest rate policy.