Dollar climbs to one-month high

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NEW YORK (CNNMoney.com) -- The dollar rose against rival currencies Tuesday as weakness in global stock markets and concerns about the banking sector boosted demand for the greenback as a safe haven.

The dollar index, which measures the greenback's value against a basket of currencies, climbed to its highest level in a month.

The dollar gained 0.6% against the euro to $1.4723, but fell 0.1% versus the U.K. pound at $1.6426. Against the Japanese yen, the dollar was up slightly to ¥90.26.

The dollar rallied in early trading as European markets tumbled on concerns about the U.K. banking sector. But the gains were tempered in the afternoon as dollar-denominated commodities, particularly gold, rose sharply.

U.S. stocks were lower as investors continued to worry that the massive 2009 rally has outpaced the still-germinating recovery. Those concerns largely outweighed more upbeat news that Warren Buffett's Berkshire Hathaway has purchased Burlington Northern Santa Fe in a $44 billion cash-and-stock deal.

While economic jitters could keep the dollar well supported in the near term, the long-term outlook is cloudy, according to Camilla Sutton, currency strategist at Scotia Capital.

Sutton said the dollar will remain pressured by concerns about the U.S. budget deficit, investment flows to overseas markets and exceptionally low interest rates.

"We continue to believe that we have not reached the bottom in the U.S. dollar and that we are in the midst of a corrective move," she said.

Meanwhile, the Federal Reserve kicks off a two-day meeting Tuesday. The U.S. central bank is widely expected to hold interest rates at historic lows near 0%.

Investors will be tuning into the Fed's statement, due out Wednesday, for any hints as to when it plans to start removing the trillions of stimulus funds it has poured into the economy since the financial crisis took hold.

The market is also awaiting the U.S. government's closely watched monthly jobs report on Friday.

Economists surveyed by Briefing.com believe payrolls shrank by 175,000 jobs in October after a loss of 263,000 jobs in September. The unemployment rate is expected to hit 9.9% after climbing to 9.8% the month before.