* Dollar index hovers near 7-month high
* Higher US yields buoy dollar
* Pound holds gains but still under pressure
By Shinichi Saoshiro
TOKYO, Oct 13 The dollar hovered near a
seven-month high early on Thursday on reinforced prospects for a
near-term U.S. interest rate hike, while the euro struggled near
2-1/2-month lows versus the greenback.
Sterling was steady, with the dollar's broad strength
cutting short the pound's rebound on a slight easing of concerns
over a potential "hard Brexit".
The dollar index was little changed at 98.005, not
far from 98.043 touched overnight, its highest since March 10.
The greenback rose 0.2 percent to 104.435 after
rising to 104.490 the previous day, its highest since late July.
The dollar was boosted on Wednesday by the minutes of the
Federal Reserve's September policy meeting showing several
voting members of the policy committee judged a rate hike would
be warranted "relatively soon" if the U.S. economy continued to
U.S. bond yields rose, with the benchmark 10-year Treasury
yield reaching a four-month high, to help lift the dollar.
"Whether the latest bull phase by the dollar is real or not
depends on how the various U.S. asset markets can co-exist with
the prospects of a Fed hike," said Junichi Ishikawa, senior FX
strategist at IG Securities in Tokyo.
"While it is plain to see that higher Treasury yields are
pushing up the dollar, equities are also up. Dollar/yen has
climbed above 104 amid lessened demand for the yen as the stock
markets are holding up."
Analysts said the rise in Treasury yields also increased the
dollar's attraction relative to the euro, with the spread
between U.S. and German two-year bond yields at its widest in a
The euro inched up 0.1 percent to $1.1013 but
remained in close reach of $1.1004 seen the previous day and its
lowest since late July.
Sterling was little changed at $1.2192 after rising
about 0.7 percent overnight to pull away from a 31-year low
below $1.1500 struck last Friday.
The pound had surged by as much as 1.5 percent after British
Prime Minister Theresa May said she would give lawmakers some
scrutiny of the Brexit process and would seek "maximum possible
access" to Europe's single market.
Woes for sterling appeared far from over, however, as May
sounded less concessionary when speaking in parliament.
(Editing by Eric Meijer)