(Adds analyst's comment, updates prices)
* Dollar index at strongest since March
* U.S. Treasury 10-year yields hit 4-month highs
* Market awaits Fed minutes to confirm December rate hike
* Sterling drops for 4th straight day
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 11 The dollar surged to a
seven-month high against a major currency basket on Tuesday, as
investors increased bets 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" 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 4 percent of its
value against the dollar.
In the United States, investors are looking to Wednesday's
release of the latest Fed monetary policy meeting's minutes 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.
The euro also had a major technical breakdown against the
strengthening dollar on Tuesday, dashing a nearly two-month
consolidation pattern, analysts said.
"Expectations for a December (U.S.) rate hike are running
high," which have supported the dollar, said James Chen, head of
research at Forex.com in Bedminster, New Jersey.
"A series of U.S. economic data releases at the end of this
week, including retail sales, the producer price index and
consumer sentiment, could help shape expectations and the dollar
movement going forward," Chen said.
Analysts also said the dollar has benefited as Democratic
presidential nominee Hillary Clinton widened her lead in opinion
polls over Republican candidate Donald Trump.
Omer Esiner, chief market analyst at Commonwealth Foreign
Exchange in Washington, said Clinton was seen as the status quo
candidate and her victory would likely create fewer policy
uncertainties than Trump's.
In late trading the dollar index, which measures the
greenback against six major currencies, rose 0.8 percent to
97.650 after hitting its highest since March.
The euro fell to a more than two-month low against the
dollar, and was last down 0.8 percent at $1.1054.
Against the yen, the dollar slipped 0.3 percent to 103.38
, but has gained two percent so far this month.
The British pound, which has weakened for four straight
sessions, fell 1.8 percent to $1.2128. Some analysts said
further weakness in the pound could be expected as the impact of
Brexit continues to unfold.
But Michael Sneyd, macro quantitative strategist at BNP
Paribas in London, said he believed that based on the bank's
forex models, sterling's current rate against the dollar already
reflects the worst-case scenario for the British currency.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Alistair
Bell and Richard Chang)