- Euro rises on upbeat German data, ECB official remarks
- U.S. wage growth fuels bets on Fed rate hike in Dec
- U.S.-North Korea tensions cap dollar bounce
- Sterling gains as Prime Minister May seen holding power
(Updates to late U.S. market action)
The dollar slipped on Monday from a 10-week peak against a basket of currencies as the euro strengthened and U.S. stock prices faded from their initial highs.
The euro was buoyed by data showing German industrial output notched its biggest monthly increase in more than six years in August. Comments from European Central Bank Executive Board member Sabine Lautenschlaeger calling for the ECB to roll back asset purchases in 2018 also boosted the single currency.
Signs that the Federal Reserve may raise key borrowing costs for a third time in 2017 and that U.S. President Donald Trump's tax plan might be back on track have fueled the dollar index's near 3 percent recovery from a more than 2-1/2-year low in the past month.
But some analysts said the greenback's recovery will be limited as U.S. economic growth remains modest and overseas central banks are considering either raising interest 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 could cap further dollar gains 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 what he was referring to, but the comments seemed to suggest 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, after data showed a stronger-than-forecast increase in average hourly earnings last month.
The index was down 0.1 percent at 93.668 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.
The euro edged up 0.1 percent at $1.1748 EUR= and was 0.2 percent higher at 132.39 yen EURJPY= .
Currency trading volume was light due to holidays in Japan, Canada, South Korea and the United States.
Wall Street stock prices were little changed after the Dow and Nasdaq reached record highs in early trading.
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.
The pound GBP=D4 was last up 0.7 percent at $1.3155.
======================================================== Currency bid prices at 2:44PM (1844 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1749 $1.1733 +0.14% +11.76% +1.1755 +1.1719 Dollar/Yen JPY= 112.6600 112.6300 +0.03% -3.60% +112.7400 +112.3400 Euro/Yen EURJPY= 132.38 132.14 +0.18% +7.50% +132.4900 +131.8800 Dollar/Swiss CHF= 0.9794 0.9779 +0.15% -3.77% +0.9807 +0.9775 Sterling/Dollar GBP= 1.3151 1.3063 +0.67% +6.61% +1.3183 +1.3059 Dollar/Canadian CAD= 1.2541 1.2534 +0.06% -6.62% +1.2558 +1.2526 Australian/Doll AUD= 0.7759 0.7769 -0.13% +7.54% +0.7782 +0.7747 arEuro/Swiss EURCHF= 1.1510 1.1473 +0.32% +7.40% +1.1518 +1.1467 Euro/Sterling EURGBP= 0.8934 0.8981 -0.52% +4.88% +0.8980 +0.8907 NZ NZD= 0.7068 0.7092 -0.34% +1.83% +0.7085 +0.7052 Dollar/DollarDollar/Norway NOK= 7.9716 7.9850 -0.17% -7.70% +8.0048 +7.9697 Euro/Norway EURNOK= 9.3659 9.3734 -0.08% +3.08% +9.3909 +9.3609 Dollar/Sweden SEK= 8.1109 8.1149 +0.09% -10.94% +8.1330 +8.1068 Euro/Sweden EURSEK= 9.5311 9.5224 +0.09% -0.51% +9.5370 +9.5181 All spots FX=Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX World central bank news CEN Economic Forecasts... ECON Official rates...INT/RATE Forex Diary.......MI/DIARY Top events........M/DIARY Diaries...........DIARY Diaries Index........IND/DIARY Press Digests.....PRESS Polls on G7 economies..SURVEY/ European markets......MARKETS/))
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