- 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, adds quote from Reuters Investment Summit)
The dollar reached a 16-month high against a basket of currencies on Monday as investors built bets on a Federal Reserve interest rate increase next month, and political risks in Europe 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.
Last Tuesday's U.S. elections produced a split control of Congress that suggested more fiscal stimulus measures are unlikely, sparking a wave of selling in the dollar.
The greenback has since recovered on the Fed's signal that it would hike key lending rates further as the 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.
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=
An index that tracks the dollar against the euro, yen, sterling and three other currencies .DXY was up 0.64 percent at 97.527. It reached 97.578 earlier Monday, which was the highest since June 2017.
The dollar index's rise was capped by a sharp selloff on Wall Street where the S&P 500 .SPX lost 1.21 percent.
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.
Sterling GBP=D3 fell 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 0.98 percent at $1.2852 and the euro was marginally lower against the pound at 87.455 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.
"Italy has catastrophic risk written all over it," Scott Minerd, global chief investment officer at Guggenheim Partners, said at the Reuters Global Investment Outlook Summit, on Monday.
The single currency fell 0.82 percent versus the dollar to its lowest since June 2017 at $1.124. EUR=EBS .
======================================================== Currency bid prices at 3:06PM (2006 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1241 $1.1334 -0.82% -6.29% +1.1332 +1.1236 Dollar/Yen JPY= 113.8100 113.8200 -0.01% +1.01% +114.2000 +113.6700 Euro/Yen EURJPY= 127.94 128.98 -0.81% -5.36% +129.1800 +127.8200 Dollar/Swiss CHF= 1.0098 1.0053 +0.45% +3.64% +1.0106 +1.0052 Sterling/Dollar GBP= 1.2851 1.2974 -0.95% -4.91% +1.2965 +1.2828 Dollar/Canadian CAD= 1.3227 1.3209 +0.14% +5.17% +1.3232 +1.3182 Australian/Doll AUD= 0.7188 0.7224 -0.50% -7.86% +0.7237 +0.7188 arEuro/Swiss EURCHF= 1.1352 1.1394 -0.37% -2.88% +1.1399 +1.1336 Euro/Sterling EURGBP= 0.8744 0.8738 +0.07% -1.55% +0.8773 +0.8710 NZ Dollar/Dolar NZD= 0.6723 0.6737 -0.21% -5.12% +0.6757 +0.6707 Dollar/Norway NOK= 8.4969 8.4347 +0.74% +3.53% +8.5025 +8.4276 Euro/Norway EURNOK= 9.5517 9.5574 -0.06% -3.01% +9.5630 +9.5215 Dollar/Sweden SEK= 9.1276 9.0785 -0.32% +11.29% +9.1473 +9.0785 Euro/Sweden EURSEK= 10.2600 10.2928 -0.32% +4.28% +10.2930 +10.2576 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC: CFTC U.S. dollar positioning http//tmsnrt.rs/2QAfhqrCOLUMN: 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 News from the Reuters Global Investment 2019 Outlook Summit, http://www.reuters.com/summit/investment19
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