A robust dollar swept to a 14-month high on Tuesday as investors tweaked bets on an early hike in U.S. interest rates, burdening oil, gold and stocks in the energy majors.
As the dollar broke to a six-year peak on the yen and a 14-month top against the euro, gold sagged to a three-month trough and Brent oil settled below the $100 a barrel mark.
Giving the dollar bulls encouragement was research from San Francisco Fed economists that showed investors are pricing in a lower trajectory for interest rates rises than members of the Fed itself are.
The dollar index, which benchmarks the greenback against six other major currencies, was up 0.25 percent, having climbed to a 14-month high of 84.519. A break above 84.753 would take it to highs not seen since July 2010.
"(The Fed report) has reinforced the stronger dollar trend that has been in place for the last couple months," said Lee Hardman, a currency strategist at Bank of Tokyo Mitsubishi in London.
"As we move forward we think we will increasingly see monetary policy diverge between the Fed and the other major central banks, and that is likely to be supportive for further gains against the euro and the yen."
European shares had opened on a more solid footing having been buffeted on Monday, particularly in London, by strong signs that the campaign for an independent Scotland was gaining momentum.
The FTSE share index inched up 0.2 percent, closely followed by Frankfurt's Dax and the CAC 40 in Paris. Sterling, having seen its biggest fall in over 2-1/2 years on Monday, was steadier but stayed rooted at 10-month lows.
A second opinion poll released overnight again showed a marked increase in support for Scottish independence just nine days before the country votes on whether to break away from the United Kingdom.
The TNS poll found support for the 'yes camp had risen six points to 38 percent, just a pip behind the 'No' vote at 39 percent. That followed a weekend YouGov poll showing approval of independence at 51 percent against the unity camp's 49 percent, the first this year to find a majority for a 'Yes' vote.
The stronger dollar remained the day's overarching theme however. Oil and gas stocks underperformed as a result of the lower crude price while European bonds were being dragged around by the rise in U.S. Treasury yields.
Ten-year Treasurys rose to 2.490 percent overnight, up from a low of 2.3870 touched last Friday after a soft August payrolls report.
The greenback raced to a high of 106.33 yen, while the euro slumped to a low of $1.2868.
Investors were giving the common currency a wide berth after the European Central Bank surprised on Thursday with a fresh round of stimulus.
A falling yen tends to be viewed as positive for Japanese exporters and corporate profits, and helped nudge the Nikkei share index to its highest close since January.
Other markets in the region were subdued. The CSI300 index of leading Shanghai and Shenzhen A-share listings edged higher, having put in its best performance in a year last week with gains of almost 5 percent.
That came as China's central bank also hiked the fixing for the yuan against the dollar to send it to a six-month high.
"The PBOC (central bank) has been set stronger midpoints since May when China's exports and trade surpluses have been recovering, guiding the yuan up gradually," said one trader.
The gains for the dollar meant losses for commodities, with gold down at $1,255.40 an ounce after losing more than 1 percent on Monday.
Brent crude oil eased another 24 cents to $99.96 per barrel, after slumping as far as $99.36 overnight, the lowest since May 2013. U.S. crude managed a modest bounce of 25 cents to $92.91.
The price drop has led to expectations of an OPEC output cut when Gulf Arab oil ministers gather on Thursday in Kuwait for the organization's annual meeting.
"Oil at below a $100 a barrel is a little bit risky in the current market — $100 per barrel is really a central point for oil countries," Tetsu Emori, a commodity fund manager at Japan's Astmax said.
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