News: FOREX-Dollar hovers at 10-week highs on Fed rate hike prospects

• Rise in U.S. wage growth raise bets on Fed rate hike in December U.S.-North Korea tensions seen capping dollar's bounce
• Sterling gains as Prime Minister May clinging to power
• NZ dollar hits 4-month low on election uncertainty

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The dollar was firm against a basket of currencies on Monday, hovering at a 10-week high, as surprisingly stronger U.S. wages data in September bolstered bets the Federal Reserve would hike interest rates in December.

Strength on Wall Street with the Dow and Nasdaq equity indexes setting record peaks also supported the greenback.

The dollar index's near 3 percent recovery from a more than 2-1/2 year low in the past month has stemmed from signs that the U.S. central bank may raise key borrowing costs for a third time in 2017 and President Donald Trump's tax reform plan might be back on track.

But some analysts said the greenback's recovery is limited as U.S. economic growth remains modest and overseas central banks are considering either raising rates or reducing their bond purchases.

"We see some further dollar strength from a possible December rate hike, but the upside is limited because the dollar is an overall trend of long-term weakness," said Eric Viloria, currency strategist at Wells Fargo Securities in New York.

Another factor that would cap further gains in the dollar is the tension between the United States and North Korea.

On Saturday, Trump said "only one thing will work" in dealing with Pyongyang. He did not make clear to what he was referring, but his comments seemed to be a further suggestion that military action was on his mind.

The dollar index - which measures the greenback against a basket of six other major currencies - on Friday hit 94.267 .DXY , its highest since July 20 following a stronger-than-forecast 0.5 percent increase in average hourly earnings last month. It was little changed at 93.789 on Monday.

Interest rates futures implied traders saw an 88 percent chance the Fed would raise rates in December FFZ7 FFF8 , according to CME Group's FedWatch program.

Data on Friday showed speculators cut their bearish bets on the U.S. dollar in the week up to last Tuesday.

Currency trading volume was light due to holidays in Japan, Canada, South Korea and the United States.

Meanwhile, sterling was the biggest mover among developed-market currencies, recovering as much as 0.9 percent GBP=D3 on signs that a plot to topple Prime Minister Theresa May would not be successful, easing political uncertainty a touch.

The pound GBP=D4 was last up 0.6 percent at $1.3138. The New Zealand dollar NZD=D3 touched a four-month low at $0.7052 after a final vote count in the country's tight general election released over the weekend failed to identify a clear winner.

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	Currency bid prices at 11:01AM (1501 GMT)  

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid  
											  Previous				   Change				   
											  Session											 
 Euro/Dollar	  EUR=		$1.1737		$1.1733	 +0.03%		 +11.64%	 +1.1748	 +1.1719  
 Dollar/Yen	   JPY=		112.6600	   112.6300	+0.03%		 -3.60%	  +112.7400   +112.3400  
 Euro/Yen		 EURJPY=	 132.24		 132.14	  +0.08%		 +7.39%	  +132.4100   +131.8800  
 Dollar/Swiss	 CHF=		0.9793		 0.9779	  +0.14%		 -3.78%	  +0.9807	 +0.9775  
 Sterling/Dollar  GBP=		1.3132		 1.3063	  +0.53%		 +6.45%	  +1.3183	 +1.3059  
 Dollar/Canadian  CAD=		1.2550		 1.2534	  +0.13%		 -6.55%	  +1.2558	 +1.2526  
 Australian/Doll  AUD=		0.7762		 0.7769	  -0.09%		 +7.58%	  +0.7782	 +0.7747  
 ar																							   

 Euro/Swiss	   EURCHF=	 1.1495		 1.1473	  +0.19%		 +7.26%	  +1.1512	 +1.1467  
 Euro/Sterling	EURGBP=	 0.8935		 0.8981	  -0.51%		 +4.90%	  +0.8980	 +0.8907  
 NZ			   NZD=		0.7069		 0.7092	  -0.32%		 +1.84%	  +0.7085	 +0.7052  
 Dollar/Dollar																					

 Dollar/Norway	NOK=		7.9767		 7.9850	  -0.10%		 -7.65%	  +8.0048	 +7.9775  
 Euro/Norway	  EURNOK=	 9.3645		 9.3734	  -0.09%		 +3.07%	  +9.3909	 +9.3633  
 Dollar/Sweden	SEK=		8.1190		 8.1149	  +0.08%		 -10.86%	 +8.1330	 +8.1068  
 Euro/Sweden	  EURSEK=	 9.5298		 9.5224	  +0.08%		 -0.52%	  +9.5370	 +9.5181  
   
	  
	  
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