* Dollar index at strongest since late July
* Swedish crown hits 6-1/2-year low
* U.S. Treasuries at 4-month highs
* Market awaits Fed minutes, Yellen speech this week
By Jemima Kelly
LONDON, Oct 11 The dollar hit an 11-week high on
Tuesday as investors upped their bets on the Federal Reserve
raising U.S. interest rates before the end of the year, and as
doubts grew over Donald Trump's ability to win the U.S.
In Sweden by contrast, market players are betting the
central bank may have to ease policy further - a view that was
strengthened by a weak inflation print on Tuesday, sending the
Swedish crown to a 6-1/2-year low against the euro.
As U.S. Treasury yields rallied to their highest levels
since early June, the dollar index - which
measures the greenback against six major peers - jumped 0.6
percent to 97.475, its highest since late July.
Traders have priced in a 70 percent chance the Fed will hike
rates at its Dec. 13-14 meeting, up from 66 percent on Friday,
according to CME Group's FedWatch tool.
Some analysts said widening odds of Trump becoming president
were also helping to drive up the dollar, after the most senior
Republican in Congress, Paul Ryan, distanced himself from him. A
Trump victory is seen as likely to trigger political
uncertainty, which markets tend to shy away from.
"Trump is widely deemed to be dollar-negative, while a
Clinton victory is regarded to be positive for the dollar. In
the absence of a shock victory for Trump, the Federal Reserve
will most likely raise interest rates in December, thanks to
improving data in the US," said Forex.com analyst Fawad
But not all were so sure about Trump's impact on the dollar.
"I think politics is difficult for the dollar these days - I
don't know if the market has quite made up its mind about what
to make of a possible Trump victory," said DZ Bank currency
strategist Sonja Marten, from Frankfurt.
"I think (the dollar strength) is more to do with the Fed...
At this point it seems like they're more willing to take a
slightly more hawkish stance."
Investors are looking to Wednesday's release of minutes of
the latest Federal Reserve Open Market Committee meeting to see
how close the Fed was to hiking rates last month.
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.
China's yuan slipped further, hitting a new
six-year low after the central bank set a weaker guidance rate,
fuelling market expectations that it may allow further
depreciation and triggering dollar purchases, traders said.
New Zealand's dollar fell more than 1 percent to hit $0.7058
, its weakest since late July, after an official from
the country's central bank reiterated that further rate cuts
would be needed to jump-start inflation.
Japanese, Canadian and some U.S. markets were closed on
Monday for holidays.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Tokyo markets team; Editing by Mark
Trevelyan and Alexandra Hudson)