Dollar strengthens with U.S. economy, view on Fed rate hikes...

• 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 http://tmsnrt.rs/2egbfVh

(Updates market action, changes dateline, previous LONDON)

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. FFZ8 FFF9

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. NETUSDG10=

At 10:28 a.m. (1528 GMT), an index that tracks the dollar against the euro, yen, sterling and three other currencies .DXY 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 GBP=D3 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. EUR=EBS .

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	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 
	 
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GRAPHIC: CFTC U.S. dollar positioning	http//tmsnrt.rs/2QAfhqr 

COLUMN: Hedge funds resume attack on sterling as Brexit fears mount: McGeever POLL: Chance of no-deal Brexit holds firm at one-in-four as clock ticks

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