* U.S. angers China after Senate passes Hong Kong rights
* Pound weaker on the day
(New throughout, updates rates and adds comments post-U.S.
market open; new byline, changes dateline from London)
By Saqib Iqbal Ahmed
NEW YORK, Nov 20 (Reuters) - The dollar edged higher on
Wednesday as worsening U.S.-China relations supported demand for
the safe-haven greenback even as investors awaited the release
of minutes from the Federal Reserve's October policy meeting for
clues to the path of future U.S. interest rates.
Investors, who in recent weeks had grown optimistic that
Washington and Beijing would sign a so-called "phase one" deal
this month to scale back their 16-month-long trade war, were
worried by a hardening of the trade war rhetoric from both
sides.
The United States would raise tariffs on Chinese imports if
no deal is reached with Beijing to end a trade war, U.S.
President Donald Trump said on Tuesday, threatening an
escalation of the spat that has damaged economic growth
worldwide. The mood in markets was further soured after the U.S. Senate
angered China by passing a bill requiring annual certification
of Hong Kong's autonomy and warning Beijing against suppressing
protesters. China demanded the United States stop interfering in
its internal affairs and said it would retaliate. The dollar index .DXY , which compares the dollar against
six major currencies, was up 0.06% at 97.914. The index rose as
high as 98.038 earlier in the session.
"It is the same theme that is coming back today, which is
essentially the trade tensions between the U.S. and China," said
Minh Trang, senior FX trader at Silicon Valley Bank.
"There is a little bit stronger rhetoric today and it is
kind of pushing the market into a more of a risk-off zone,"
Trang said.
U.S. Treasury yields and stocks slipped on Wednesday as
investors shunned relatively riskier assets in favor of safe
havens.
China's yuan slipped to a new two-week low against the
dollar on Wednesday morning. CNY=CFXS Trade-exposed currencies weakened, with the Australian
dollar down 0.19% versus the U.S. dollar AUD= .
Investors were also looking forward to the release of the
minutes from the U.S. Federal reserve's FOMC meeting in October
are due at 2 p.m. EST (1900 GMT). Analysts expect little impact
as the Fed made it clear in October that they were not going to
cut interest rates any more this year.
"Where do we go from here, especially as we turn the corner
on 2020, that's what most people will be looking for," Trang
said.
Elsewhere, sterling GBP= fell 0.05%, a second straight day
of declines, dented by Labour leader Jeremy Corbyn's
better-than-expected showing in a pre-election TV debate versus
Prime Minister Boris Johnson who is perceived by markets as more
business-friendly.
G7 implied volatility https://tmsnrt.rs/2qfLknL
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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