November 12, 2018 / 3:48 PM / a month ago

FOREX-Dollar climbs to 16-month peak; pound falls on Brexit fears

    * Dollar strengthens with U.S. economy, view on Fed rate
hikes
    * Sterling tumbles 1 pct on no-deal Brexit fears
    * Euro weakens on worries over Italy budget standoff
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, Nov 12 (Reuters) - The dollar reached a 16-month
high on Monday against a basket of currencies as investors built
bets on a Federal Reserve interest rate increase next month, and
political risks in Europe which put pressure on the euro and the
pound.
    Fears about a no-deal Brexit and a growing rift in Europe
over Italy's budget have also boosted the dollar.  
    The greenback has rebounded from losses tied to the view
that U.S. elections last Tuesday, which produced a split control
of Congress, would reduce chances of more fiscal stimulus
measures.
    The dollar's bounce has been underpinned by the Fed's signal
that it would hike key lending rates further as U.S. economic
expansion remains on track.
    "Rising global uncertainty and a widening U.S. yield
differential with other economies provide support, but an
elevated valuation may constrain further gains," Richard
Turnill, global chief investment strategist with BlackRock wrote
in a research note on Monday. 
    The futures market implied traders saw about a 76 percent
chance the U.S. central bank would raise rates for a fourth time
in 2018 at its Dec. 18-19 policy meeting, according to CME
Group's FedWatch program.
    Net long positions on the dollar versus G10 currencies last
week rose to their highest levels since 2015 at $30.4 billion,
according to CFTC data.
    At 10:28 a.m. (1528 GMT), an index that tracks the dollar
against the euro, yen, sterling and three other currencies
 was up 0.44 percent at 97.331. It reached 97.578 earlier
Monday, which was the highest since June 2017.
    U.S. trading was muted by the U.S. Veterans Day holiday. 
While Wall Street and currency markets were open for business,
the U.S. bond market was closed.
    The sterling shed over 1 percent at one point as
doubts grew over Prime Minister Theresa May's ability to get the
backing of the EU and her own party for any Brexit deal.

    With less than five months before Britain is due to leave
the EU on March 29, negotiations are still stuck over how to
prevent a return to a hard border between British-ruled Northern
Ireland and EU member Ireland.
    The pound was down 0.66 percent at $1.2893 and the euro was
marginally lower against the pound at 87.36 pence.
    The euro was knocked back by concerns about Rome's tension
with the European Commission over its 2019 budget and weakness
in Italy's banking sector. 
    The single currency fell 0.63 percent versus the dollar to
its lowest since June 2017 at $1.124..
========================================================
    Currency bid prices at 10:31AM (1531 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1262        $1.1334     -0.64%         -6.12%      +1.1332     +1.1241
 Dollar/Yen       JPY=        113.8100       113.8200    -0.01%         +1.01%      +114.2000   +113.7300
 Euro/Yen         EURJPY=     128.20         128.98      -0.60%         -5.16%      +129.1800   +128.1400
 Dollar/Swiss     CHF=        1.0095         1.0053      +0.42%         +3.61%      +1.0106     +1.0052
 Sterling/Dollar  GBP=        1.2889         1.2974      -0.66%         -4.61%      +1.2965     +1.2828
 Dollar/Canadian  CAD=        1.3198         1.3209      -0.08%         +4.94%      +1.3213     +1.3182
 Australian/Doll  AUD=        0.7205         0.7224      -0.26%         -7.64%      +0.7237     +0.7188
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1369         1.1394      -0.22%         -2.74%      +1.1399     +1.1353
 Euro/Sterling    EURGBP=     0.8736         0.8738      -0.02%         -1.64%      +0.8773     +0.8710
 NZ Dollar/Dolar  NZD=        0.6742         0.6737      +0.07%         -4.85%      +0.6757     +0.6707
 Dollar/Norway    NOK=        8.4558         8.4347      +0.25%         +3.03%      +8.4806     +8.4276
 Euro/Norway      EURNOK=     9.5249         9.5574      -0.34%         -3.29%      +9.5630     +9.5215
 Dollar/Sweden    SEK=        9.1076         9.0785      -0.33%         +11.05%     +9.1473     +9.0785
 Euro/Sweden      EURSEK=     10.2591        10.2928     -0.33%         +4.27%      +10.2930    +10.2580
    

    
 (Additional reporting by Tom Finn in London
Vatsal Srivastava in Singapore
Editing by Toby Chopra and Alistair Bell)
  
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