The dollar hit a 14-year high today as the yen slid after the Bank of Japan stuck to its ultra-loose monetary policy, while US stock indexes touched record highs as the rally in riskier assets since the US election looked set to continue.
On Wall Street, the Dow neared the 20,000 level as reassurance over Italy's plan to spend up to €20 billion to rescue its troubled banks offset risk aversion following attacks in Turkey and Germany yesterday.
"Investors have become so fast in digesting bad news, and this explains the resilience in financial markets," said Hussein Sayed, Chief Market Strategist at FXTM.
US stocks have rallied since the 8 November election, with the S&P 500 rising nearly 6% on bets that President-elect Donald Trump's plans for deregulation and infrastructure spending will give a boost to business.
Both the Dow and Nasdaq hit all-time intraday highs.
The dollar rose, tracking US bond yields higher, as the strong appetite for risk assets pushed traders out of bonds and into stocks.
Positive comments yesterday from Federal Reserve Chair Janet Yellen on the state of the US labour market also boosted the greenback.
"She didn't use the opportunity to take the market back from being overly hawkish," said UBS currency strategist Constantin Bolz, in Zurich.
"Maybe there were some people who... thought they would hold off from further dollar longs until she spoke, in case she were to row back."
The dollar rose almost half a percent against a basket of major currencies to 103.65, the highest level since December 2002.
Its gains were strongest against the yen, which slid around 1% after the Bank of Japan, shrugging off the yen's recent slump, said it would keep monetary policy loose.
Benchmark 10-year US government bond yields, which set the bar for global borrowing costs, rose to just above 2.58%.
The dollar rally and bond market selloff since the 8 November US election have been stoked by bets Trump's administration would enact looser fiscal policy, which would spur higher US growth and inflation.
"The dollar and bonds have been trading in lockstep," said Ellis Phifer, senior market strategist at Raymond James in Memphis, Tennessee.
"There are still concerns spending will increase and more debt supply will be on its way."
The greenback has risen 12% versus the yen since Mr Trump's surprise victory.
The win was made official yesterday after Mr Trump surpassed the required 270 Electoral College votes.
