News: FOREX-Dollar rises as Fed hints at December rate hike

• Dollar index climbs to highest level in over two weeks
• Fed sticks to view on three rate increases in 2017
• As expected Fed to reduce $4.5 trillion balance sheet in October
• Mexican peso rebounds after losses tied to major earthquake

(Updates market action, adds quotes)

The dollar rose broadly on Wednesday, hitting a two-month high versus the yen, as the Federal Reserve signaled it may raise interest rates for a third time this year even as inflation has remained below its 2 percent goal.

The U.S. central bank also said after a two-day meeting it will begin reduction of the Fed's $4.5 trillion balance sheet in October by allowing small amounts of Treasuries and mortgage-backed securities to run off.

"Right now, the market sees the Fed more hawkish than anticipated," said Tim Alt, director of currencies and rates at Aviva Investors.

Some traders had thought catastrophic damage from Hurricanes Harvey and Irma in Texas and Florida might force the Fed to postpone a rate increase until next year.

The Fed raised rates by a quarter point in March and June and its current target range is now at 1.00-1.25 percent.

"The Fed didn't alter this time to the market's outlook. This time the market adjusted to the Fed's outlook," said Brent Schutte, chief investment strategist with Northwestern Mutual Wealth Management Co.

The futures market implied traders saw a 73 percent chance of the Fed raising rates at its Dec. 12-13 meeting FFZ7 FFF8 , up from 52 percent before the Fed's latest policy statement and forecast, CME Group's FedWatch tool showed.

The dollar index, which tracks the greenback against six major currencies, was modestly lower before turning higher on the Fed's forecast for one more rate hike in 2017. It was up 0.7 percent for its biggest one-day increase since Aug. 4 at 92.426.

The euro EUR= slid 0.8 percent to $1.1894, its lowest in four sessions, while the greenback gained 0.5 percent to 112.17 yen JPY= after touching a two-month high at 112.51 yen, Reuters data showed.

Among emerging market currencies, the Mexican peso MXN=D2 recovered from Tuesday's losses spurred by the second deadly earthquake to strike the country in two weeks.

The Mexican currency ended up 0.2 percent at 17.76 peso per dollar MXN=D2 , reversing the prior day's 0.2 percent decline.

The New Zealand dollar NZD=D4 gained 0.6 percent to $0.7360 after reaching its highest level in 6-1/2 weeks as one poll showed the country's National Party pulled ahead of the rival Labour Party ahead of a general election this weekend.

Support for the National Party jumped 6 points to 46 percent, according to the One News-Colmar Brunton opinion poll, while support for the opposition Labour party slumped by seven points to 37 percent.

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	Currency bid prices at 5:05PM (2105 GMT)  

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid  
											  Previous				   Change				   
											  Session											 
 Euro/Dollar	  EUR=		$1.1894		$1.1891	 +0.03%		 +13.14%	 +1.1895	 +1.1892  
 Dollar/Yen	   JPY=		112.2000	   112.2100	-0.01%		 -4.00%	  +112.2500   +112.2100  
 Euro/Yen		 EURJPY=	 133.44		 133.43	  +0.01%		 +8.36%	  +133.5000   +133.4500  
 Dollar/Swiss	 CHF=		0.9696		 0.9697	  -0.01%		 -4.74%	  +0.9698	 +0.9700  
 Sterling/Dollar  GBP=		1.3492		 1.3492	  +0.00%		 +9.37%	  +1.3495	 +1.3494  
 Dollar/Canadian  CAD=		1.2324		 1.2319	  +0.04%		 -8.24%	  +1.2328	 +1.2323  
 Australian/Doll  AUD=		0.8028		 0.8031	  -0.04%		 +11.27%	 +0.8031	 +0.8029  
 ar																							   

 Euro/Swiss	   EURCHF=	 1.1535		 1.1534	  +0.01%		 +7.63%	  +1.1535	 +1.1536  
 Euro/Sterling	EURGBP=	 0.8814		 0.8813	  +0.01%		 +3.48%	  +0.8816	 +0.8813  
 NZ			   NZD=		0.7355		 0.7355	  +0.00%		 +5.96%	  +0.7358	 +0.7358  
 Dollar/Dollar																					

 Dollar/Norway	NOK=		7.8609		 7.8634	  -0.03%		 -8.99%	  +7.8624	 +7.8649  
 Euro/Norway	  EURNOK=	 9.3500		 9.3530	  -0.03%		 +2.91%	  +9.3549	 +9.3534  
 Dollar/Sweden	SEK=		8.0108		 8.0115	  -0.04%		 -12.04%	 +8.0132	 +8.0135  
 Euro/Sweden	  EURSEK=	 9.5271		 9.5306	  -0.04%		 -0.55%	  +9.5333	 +9.5309  
   
	  
	  
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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The dollar index's decline (YTD)	http://reut.rs/2xPcIuM  

Kiwi-dollar jumps on election poll http://reut.rs/2xRlPvc World FX rates in 2017 http://tmsnrt.rs/2egbfVh

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