* Dollar index up slightly on the day
* Sterling edges lower on Brexit worries
(Updates with afternoon trading)
By Saqib Iqbal Ahmed
NEW YORK, Oct 7 (Reuters) - The dollar edged higher against
a basket of currencies on Monday as traders awaited U.S.-China
trade talks later in the week for clues to the state of the
prolonged trade war between Washington and Beijing, even as
chances of a deal appeared low.
Investors' overall appetite for risk was weak on Monday
after a Bloomberg report said that Chinese officials were
reluctant to agree to U.S. President Donald Trump's broad trade
deal. Top-level U.S.-China trade talks are scheduled to resume
next Thursday and Friday, when Chinese Vice Premier Liu He meets
with U.S. Trade Representative Robert Lighthizer and Treasury
Secretary Steven Mnuchin in Washington.
"The tone of markets overall has softened again today
following news that Chinese officials are reluctant to agree to
a broad trade agreement with the U.S.," Shaun Osborne, chief
market strategist, at Scotiabank in Toronto, said in a note.
The dollar index .DXY , which measures the greenback
against a basket of other currencies, was up 0.17% at 98.979.
The dollar strengthened against the safe haven Japanese yen
after a Fox Business reporter tweeted that the Chinese Commerce
Ministry said that China is ready to do a deal with the United
States on parts of negotiations both sides agree upon.
The dollar was last up 0.36% against the yen at 107.32 yen.
Still, lingering concerns over the trade war pressured
trade-oriented currencies such as the Australian dollar, which
slipped 0.56% against the greenback.
"A trade agreement between the United States and China still
does not seem to be imminent," Marc-André Fongern, a strategist
at MAF Global Forex in Frankfurt said.
Investors also awaited the U.S. Federal Open Market
Committee's minutes from its September meeting, due on
Wednesday, for clues to whether the Fed will cut rates at its
October meeting, in what would be its third interest rate cut
for the year.
"(Fed Chair Jerome) Powell and his colleagues might
increasingly consider a more aggressive loosening of monetary
policy," said Fongern.
"This would only temporarily weaken the dollar, as it looks
set to remain in demand as a safe-haven currency," he said.
While the dollar has been in favor for many months now
thanks to its relatively high interest rate and a strong
economy, the ongoing trade war with China and a scramble for
funding in U.S. money markets have added fuel to the fire in
recent weeks.
The greenback hit a 28-month high against the euro early
last week. On Monday, the common currency was up about flat on
the day.
Sterling slipped against the greenback as investors grew
increasingly concerned that Britain and the European Union were
no closer to agreeing a Brexit withdrawal deal. The pound was
0.3% lower on the day.
Speculators raise dollar positions https://tmsnrt.rs/35bKsA3
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>