*

Dollar falls as investors fret about weakening U.S.

economy

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Markets split on Fed cut in December

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Euro/Swiss at lowest since 2015's de-pegging

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Sterling slips after FT report Starmer and Reeves ditching

plans

to raise income tax rates

(Updates with early European trading)

By Rae Wee and Alun John

SINGAPORE/LONDON, Nov 14 (Reuters) -

Currency markets swirled on Friday as a selloff in stocks

sent investors to the safe-haven Swiss franc, which hit its

strongest to the euro since 2015, while the pound was hurt by a

report the UK budget this month will not see expected income tax

rises.

There are multiple cross currents in markets at present,

but most fundamentally, the moves come as traders now see a

Federal Reserve rate cut in December as much less likely than

they did a few weeks ago.

More Fed officials signalled caution overnight over further

easing, citing worries about inflation and signs of relative

stability in the labour market.

Investors now see just over a 50% chance of a

25-basis-point cut in December, although odds for such a move in

January are almost fully priced.

That shift sparked a sell off in richly-valued stocks and

government bonds in the U.S. which spilled over into Asia and

Europe, while, in currency markets, it had the effect of sending

people to the Swiss franc.

SAFETY IN SWITZERLAND

The euro dropped to as low as 0.9184 francs, its lowest

since 2015's dramatic swings when Swiss authorities de-pegged

their currency from the euro.

The common currency was last down 0.18% at 0.9206

francs, while the dollar hit a one-month low, and was last down

0.1% at 0.7920 francs.

The dollar itself was oddly less moved by all the drama,

trading flat against a basket of six peers at 99.26. The index

hit a six-month high last month, although it is down about 0.3%

on the week.

Versus the euro, the greenback was a fraction stronger

at $1.1621 to the common currency.

Typically, higher U.S. yields and a stock market selloff

would see investors rush to the greenback, while earlier this

year, during the turmoil sparked by U.S. President Donald

Trump's tariff announcements, the dollar fell alongside stocks

and bonds.

"I think we've learned something about dollar

positioning from this," said Jane Foley, head of FX strategy at

Rabobank.

She said markets which had been short dollars after the

tariff turmoil had been gradually covering those positions.

"And then this week, because the market was no longer

short, they were rebuilding those again, so there has been a lot

of position adjustment going on, which has meant it's very

difficult to judge the normal reaction."

Further complicating the picture are attempts by markets

to predict what U.S. economic data will say when it is released

after the U.S. shutdown lifts.

The White House indicated the U.S. unemployment rate for

October may never be available, since it is dependent on a

household survey that was not conducted during the shutdown.

UK TURMOIL

Elsewhere, the pound tumbled against both the dollar and

the euro after a report by the Financial Times that British

Prime Minister Keir Starmer and Finance Minister Rachel Reeves

have abandoned plans to raise income tax rates, marking a sharp

shift just weeks ahead of the November 26 budget.

It was down as much as 0.5% on the dollar at one point and

was last down 0.3% at $1.3155. The euro hit 88.64 pence, its

highest to the pound since April 2023.

British government bond prices and British stocks

also fell

.

In Asian markets, it was a busy day for currencies. The

South Korean won jumped 1% against the dollar after the

country's foreign exchange authorities vowed to take measures to

stabilise a wobbly currency and were suspected of dollar-selling

market intervention.

The battered yen meanwhile found some reprieve thanks

to the pullback in the dollar, although it remained pinned near

a nine-month low hit earlier this week.

It was last at to 154.7 per dollar, but remained on track

for a fall of 0.8% for the week.

In China, the onshore yuan peaked at a one-year

high of 7.0908 per dollar, with traders citing dollar-selling by

local exporters after the currency pair breached a key

threshold.