(Recasts, adds comment, updates prices, changes byline, dateline; previous LONDON)
* 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 view
* Sterling drops again
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 11 (Reuters) - 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 meeting
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)