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* Dollar index at strongest since late July
* U.S. Treasury 10-year yields hit 4-month highs
* Market awaits Fed minutes to confirm December rate hike
* Sterling drops again
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 11 The dollar hit an 11-week high
on Tuesday as investors increased bets that the Federal Reserve
would raise interest rates in December following a round of
generally solid U.S. economic data over the last few weeks.
Sterling continued its downward trek following a "flash
crash" event last Friday, with investors concerned about the
impact of a "hard exit" by Britain from the European Union. Over
the past week, the British pound has lost more than four percent
of its value against the dollar.
In the United States, investors are also looking to
Wednesday's release of the minutes of the latest Fed monetary
policy meeting for confirmation of the market's December rate
hike view. The rate futures market has attached a roughly 70
percent probability the Fed will lift rates at the December
That pushed benchmark U.S. 10-year yields to a
more than four-month high elevating the dollar against the yen,
the currency pair most sensitive to moves in the U.S. government
bond market. The greenback has risen in 10 of the last 11
sessions versus the Japanese currency.
"Recent data on jobs, manufacturing and services growth have
shown compelling strength that could green light a U.S. rate
hike by the end of the year," said Joe Manimbo, senior market
analyst at Western Union Business Solutions in Washington.
Speaking to reporters after a speech in Sydney, Chicago Fed
President Charles Evans said he "could be fine" with the Fed
raising rates in December, but he wanted to see how the economy
and inflation progressed before deciding.
Analysts also said the dollar has benefited as Democratic
presidential nominee Hillary Clinton widened her lead in opinion
polls over her rival, Republican candidate Donald Trump.
"To the extent that Mrs. Clinton is seen as the status quo
candidate, her victory is likely to create fewer policy
uncertainties than Mr. Trump's and is therefore likely to create
fewer possible objections to higher interest rates at the Fed
come December's FOMC meeting," said Omer Esiner, chief market
analyst at Commonwealth Foreign Exchange in Washington.
In mid-morning trading, the dollar index - which measures
the greenback against six major peers - jumped 0.5 percent to
97.450, after hitting its highest since late July.
The euro fell to a more than two-month low against the
dollar, and was last down 0.6 percent at $1.1077.
Against the yen, the dollar was flat at 103.65, but
has gained more than two percent so far this month.
The British pound, which has weakened for four straight
sessions, fell 0.8 percent to $1.2257.
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Jemima Kelly in London; Editing by Alistair Bell)