The dollar has hit a 14-year high on Wednesday, reaching its strongest position since 2003, just one week after Donald Trump became President-elect.

Major banks have been overly cautious on the immediate prospects of the dollar following Trump’s victory last week. However, the dollar managed to advance past the $1.07 per euro for the first time since the start of December 2015, and gained almost 3 percent in the space of just one week.

Yahoo News reports:

The dollar has surged in the past week, tracking Treasury yields higher on the expectation increased U.S government spending could trigger higher inflation.

The Dow Jones industrial average <.DJI> fell 72.62 points, or 0.38 percent, to 18,850.44, the S&P 500 <.SPX> lost 5.42 points, or 0.25 percent, to 2,174.97 while the Nasdaq Composite <.IXIC> added 19.73 points, or 0.37 percent, to 5,295.35.

The pan-European FTSEurofirst 300 index <.FTEU3> fell 0.21 percent, while MSCI’s gauge of stocks across the globe <.MIWD00000PUS> edged down 0.1 percent.

VOLATILE OIL, STRONG GREENBACK

Oil prices dipped in choppy trading as the market weighed Russia’s comments about a possible meeting with Saudi Arabia about output cuts against a bigger-than-expected U.S. crude storage build.

U.S. crude <CLc1> was last nearly flat at $45.84 a barrel and Brent <LCOc1> traded at $46.90, down 0.1 percent on the day. Crude had risen more than 1 percent after a statement from the Russian energy minister.

U.S. President-elect Donald Trump’s plans to cut taxes and increase infrastructure spending could boost economic activity while adding to the deficit, and his proposals to deport illegal immigrants and impose tariffs on cheap imports are seen driving inflation higher.

That prospect triggered a selloff in U.S. bonds that lifted yields across the board, and raised expectations that U.S. interest rates will rise faster than previously anticipated, giving support to the dollar.

U.S. interest rate futures are pricing in an 81 percent chance of a rate hike at the next Fed meeting, scheduled for December.

The dollar index, a measure of the greenback’s value against a basket of currencies, hit 100.57<.DXY>, its highest since April 2003. It was last little changed on the day.

The euro <EUR=> fell 0.2 percent to $1.0702, while the yen <JPY=> was little changed at 109.12 per dollar, having earlier fallen to 109.75. The greenback rose to an eight-year high against the Chinese yuan of 6.8798 yuan <CNY=CFXS>.

“The market has gone a bit too far ahead of itself. It looks vulnerable for a short-term pullback,” said Mazen Issa, senior currency strategist at TD Securities in New York, referring to the dollar rally.

Weaker-than-forecast U.S. producer prices and industrial production data on Wednesday supported Treasury prices and capped dollar gains.

Benchmark 10-year notes <US10YT=RR> last rose 4/32 in price to yield 2.2243 percent, down from 2.238 percent on Tuesday.

Spot gold <XAU=> was little changed at $1,227.00 an ounce. U.S. gold futures <GCcv1> rose 0.20 percent to $1,226.90 an ounce.

Copper <CMCU3> fell 1.3 percent to $5,456.00 a tonne.