1st LD Writethru: U.S. dollar soars on policy divergence

The U.S. dollar hiked against other major currencies on Monday as the Federal Reserve was on track for raising interest rate this year while the European Central Bank may apply further stimulus.

Market expectation for an interest-rate hike this year accumulated as several Fed officials expressed support for a rate-liftoff by year-end.

Fed Bank of Atlanta President Dennis Lockhart said on Monday that he remains confident the central bank will lift interest rates this year, even as recent market turbulence raised risks to the economic and inflation outlook.

Fed Bank of St. Louis President James Bullard said on Monday that "the case for policy normalization is quite strong," even after the Fed kept its benchmark rate unchanged last week.

However, the European Central Bank's chief economist, Peter Praet, reiterated that the bank was ready to modify its bond-buying program if economic turbulence merits action, according to reports.

The dollar index, which measures the greenback against six major peers, was up 1.11 percent at 95.916 in late trading.

On the economic front, U.S. total existing-home sales fell 4.8 percent to a seasonally adjusted annual rate of 5.31 million in August, following three straight months of gains, said the National Association of Realtors Monday.

In late New York trading, the euro fell to 1.1190 dollars from 1.1351 dollars in the previous session, and the British pound dropped to 1.5496 dollars from 1.5553 U.S. dollars in the previous session. The Australian dollar decreased to 0.7136 dollar from 0.7218 dollar.

The U.S. dollar bought 120.60 Japanese yen, higher than 119.83 yen of the previous session. The U.S. dollar rose to 0.9710 Swiss franc from 0.9642 Swiss franc, and it climbed to 1.3230 Canadian dollars from 1.3171 Canadian dollars. Enditem