The dollar hit nine-month highs against the yen and the British pound on Friday after the Federal Reserve signalled it would keep lifting US interest rates, further widening the US currency's rate advantage over its rivals. The dollar also struck a 13-month peak versus the Swiss franc, after the Fed lifted rates by a quarter-percentage point on Thursday to 3.25 percent and repeated it would keep removing its accommodative policy at a "measured" pace.
"The FOMC (Federal Open Market Committee) outcome confirmed the Fed's upbeat economic assessment and gave a green light to dollar buying," said Hideki Hayashi, global strategist at Shinko Securities.
Compared with the nine straight rises in US interest rates, the key rate in the euro zone has stayed at 2 percent for over two years and held at almost zero percent in Japan for more than four years.
An upbeat tankan survey did little to spur buying in the Japanese currency despite showing resilient business confidence in the economic outlook for Japan and plans for a bigger boost in capital spending in coming months.
The yen jumped about a tenth of a cent to the day's highs against the dollar after the Bank of Japan's quarterly survey was announced.
But it quickly slid back down to levels before the data as the market kept its focus on the dollar's widening rate advantage.
"In the end, the tankan didn't come as a major surprise to the market so traders turned their attention back to US rate rises," said a trader at a Japanese trust bank.
The dollar traded at 111.05 yen. It rose to a nine-month high of 111.13 yen before exporter selling knocked it back down, dealers said.
Immediately after the survey was released, the yen darted to 110.62 per dollar from 110.73 yen.
Sterling fell to around $1.7825 in late Tokyo trade, a level last seen in October. It bought $1.7916 in late US trade.
The pound sank as higher US rates contrasted with rising speculation the Bank of England could cut its key rate from 4.75 percent, given concerns about the strength of the British and European economies.
The dollar rose as far as 1.2895 Swiss francs, its highest level since mid-May 2004, after the Swiss government cut its economic growth forecast for the year.
The euro fetched around 133.70 yen, versus 134.31 yen in late US trade. It was at $1.2045, easing from $1.2108.
The tankan poll's headline diffusion index for big manufacturers was 18 in June, up from 14 in March and better than a reading of 15 forecast by economists.
Given the rapid pace of the dollar's rise over the past week, its gains were seen stemmed ahead of a long weekend in the United States. US financial markets will be closed on Monday for Independence Day.
Some traders said there was a risk of dollar selling versus the yen because market players hadn't closed out long dollar positions after seven straight sessions of gains.