The dollar surged to a near14-year high on Thursday, clocking up a string of milestones against other top world currencies and clobbering emerging markets.

Stronger data from the world's biggest economy underpinned the greenback’s gains, which were further amplified by thinner volumes as US traders stayed away for the Thanksgivingholiday.

The dollar pushed its way past more of last year’s peaks against the euro to hit $1.0550 in early European action, with only the March 2015 high of $1.0457 standing in the way of a drive towards parity.

The yen skidded to an eight-month low and China’s yuan to an 8-1/2 year low, while the highly sensitive Turkish lira and Indian rupee hit new historic troughs.

“There doesn’t seem to be anything stopping US yields going higher in the near-term so I think people are going tostay on the dollar trend,” said Michael Metcalfe, head of globalmacro strategy at State Street Global Markets.

“The only risk to this are that the dislocations in markets outside of the US, particularly in emerging markets, get to apoint where they start to feed back into concerns (for theFederal Reserve as it looks to raise interest rates),” he said.

In contrast to all the FX noise, European shares saw a broadly quiet start, with most of the main bourses edging marginally higher on gains from chemical and insurance firms.

German business confidence data showed firms remained unfazed, for now at least, by the US election win for Donald Trump and the political uncertainty currently bubbling in euro zone peers such as Italy.

However, the European Central Bank delivered an unusually downbeat message, warning that global political shifts could compound existing vulnerabilities to rising interest rates and revive worries about the euro zone's weaker sovereigns.

“This in turn could delay much-needed fiscal and structural reforms and could in a worst-case scenario reignite pressures on more vulnerable sovereigns,” it added. “In particular, concernsabout debt sustainability might re-emerge despite relatively benign financial market conditions.”

Emerging strains

It was enough to keep bond markets playing the transatlantic divide that has been widening again on bets that, while the United States may be about to raise interest rates, Europe is unlikely to follow suit for a couple of years.

The yield on Germany's 10-year government bond, the benchmark for the region, fell 4.2 basis points to 0.24 per cent,while Italy, which has been plagued by political concerns aheadof a referendum on constitutional reform, outperformed with yields down 7 basis points to 2.06 per cent.

In the United States on Wednesday, the two-year government bond yield hit its highest since April 2010.

The firm dollar kept most emerging market currencies on the ropes, with China’s yuan nearing the 7 per dollar level for the first time since May 2008.

State banks or foreign exchange authorities in China, India, Indonesia and the Philippines were all suspected of intervening to slow the slide in their currencies, traders said. Turkey’s lira and India’s rupee both rang in record lows.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.4 per cent, though the drop in the yen lifted the export-orientated Nikkei in Tokyo to a near11-month high.

Hong Kong’s Hang Seng shed 0.2 per cent, while higher metals prices lifted China’s blue-chip CSI300 index 0.4 per cent.

Oil prices were little changed amid all the dollar commotion and ahead of a planned OPEC-led cut in crude production at a meeting on November 30.

US crude was up 3 cents at $47.99 a barrel and Brent was flat at $48.95.

Industrial metals remained red-hot on hopes of a revival in US manufacturing and infrastructure spending under Trump. London zinc hit an 8-year high and copper jumped for a fourth day in a row to put $6,000 a tonne within reach.

“Strong durable goods orders in the U.S. helped buoy investors who have viewed Trump’s upcoming presidency as a positive for industrial metals demand,” said ANZ in a report.

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