FOREX-Dollar rises on euro woes Fed rate outlook

    * Euro wobbles on Italy budget concerns, inflation data
    * Dollar/yen hits nine-month high, up 0.9 pct on the week
    * Upbeat U.S. data seen supporting dollar
    * GRAPHIC-World FX rates in 2018 tmsnrt.rs/2egbfVh

 (New throughout, updates prices, market activity and comments)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 28 (Reuters) - The dollar climbed to a two-week peak versus a
currency basket on Friday, as concerns about the Italian budget weighed on the euro
while the greenback drew support from an outlook for multiple U.S. interest rate hikes
until 2020.
    The U.S. dollar also rose to a nine-month high against the yen. 
    For the third quarter, the dollar index, a gauge of its value against six major
currencies, was on track to post its second consecutive quarterly gain, rising 0.5
percent. For the last six months, the greenback has advanced nearly 6 percent. 
    "The reasons why the U.S. dollar was going up in the first place have not changed,"
said John Taylor, president of global macro research firm Taylor Global Vision in New
York.
    "Rising U.S. rates at the same time the global economy is showing signs of slowing
down and the ongoing trade war still provides a major barrier for any
cyclically-sensitive currency, whether it's an emerging or developed market currency,"
he added.
    In afternoon trading, the dollar index rose 0.3 percent to 95.144, rising for
three straight sessions.
    The dollar rose to a nine-month peak versus the yen of 113.66 yen, and was
last up 0.2 percent at 113.59 yen. 
    U.S. data on Friday all supported the view of an economy that is on a stable growth
path.
    U.S. consumer spending rose 0.3 percent last month after an unrevised 0.4 percent
gain in July, while a measure of underlying inflation remained at the Fed's 2 percent
target for a fourth straight month.
    The Chicago Purchasing Management index for September was 60.4, slightly lower than
the consensus forecast. The U.S. consumer sentiment index for September, on
the other hand, was slightly lower than forecast at 100.1, but still the highest since
March.
    The euro, meanwhile, slipped below $1.16 for the first time in two weeks after
Italy's government agreed on a budget seen by some investors as defying Brussels. The
euro was last down 0.2 percent at $1.1613.
    Political wrangling over the budget in heavily indebted Italy has put a lid on a
recent revival in the euro's fortunes against the dollar.
    The euro posted its biggest one-day decline for nearly two months on Thursday as the
battle over fiscal policy intensified in the euro zone's third-largest economy.

    Financial markets are nervous that the Italy's spending plans will boost the
country's debt, which is already the second highest in the euro zone as a share of
economic output after Greece, near 131 percent of gross domestic product (GDP).
    The government is targeting a budget deficit at 2.4 percent of GDP, inside the 3
percent ceiling prescribed by European Union rules.
    
    ========================================================
    Currency bid prices at 1450 EDT (1850 GMT):
 Description      RIC       Last      U.S. Close  Pct      YTD Pct  High Bid   Low Bid
                                      Previous    Change   Change              
                                      Session                                  
 Euro/Dollar      EUR=      $1.1611   $1.1639     -0.24    -3.21    +1.1651    +1.1570
 Dollar/Yen       JPY=      113.5800  113.3600    +0.19    +0.81    +113.6600  +113.3300
 Euro/Yen         EURJPY=   131.90    131.96      -0.05    -2.43    +132.3000  +131.1900
 Dollar/Swiss     CHF=      0.9786    0.9771      +0.15    +0.44    +0.9790    +0.9738
 Sterling/Dollar  GBP=      1.3040    1.3080      -0.31    -3.49    +1.3090    +1.3002
 Dollar/Canadian  CAD=      1.2930    1.3040      -0.84    +2.81    +1.3049    +1.2910
 Australian/Doll  AUD=      0.7224    0.7206      +0.25    -7.40    +0.7241    +0.7202
 ar                                                                            
 Euro/Swiss       EURCHF=   1.1367    1.1374      -0.06    -2.75    +1.1378    +1.1282
 Euro/Sterling    EURGBP=   0.8903    0.8900      +0.03    +0.23    +0.8914    +0.8873
 NZ               NZD=      0.6625    0.6617      +0.12    -6.49    +0.6639    +0.6599
 Dollar/Dollar                                                                 
 Dollar/Norway    NOK=      8.1392    8.1537      -0.18    -0.83    +8.1914    +8.1299
 Euro/Norway      EURNOK=   9.4532    9.4942      -0.43    -4.02    +9.4985    +9.4517
 Dollar/Sweden    SEK=      8.8924    8.8546      +0.17    +8.42    +8.9133    +8.8420
 Euro/Sweden      EURSEK=   10.3279   10.3100     +0.17    +4.97    +10.3375   +10.2860
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci)
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