FOREX-Dollar flat, sterling, euro tick up with market in August lull

(Recasts, new throughout, adds analyst quotes)
By Kate Duguid
NEW YORK, Aug 12 (Reuters) - The U.S. dollar index was
roughly flat on Monday and sterling and the euro saw a modest
rise as the foreign exchange market fell into an August lull, a
traditionally quiet trading period with many investors and
traders on vacation.
The British pound GBP= was 0.37% higher to trade at
$1.208, with the euro EUR= up 0.17% against the dollar at
$1.1219.
"It has been a pretty quiet day overall. We have had
sterling and euro bubbling up. I don't think there's any
particular super-positive news behind that. But, markets held
substantial shorts in both currencies," said Gregory Anderson,
global head of foreign exchange strategy at BMO Capital Markets
in New York.
The currency market is "heading into the deepest part of the
holiday period. People are taking the shorts off and it puts
upward pressure on both currencies. It's probably the biggest
story in FX for today."
The dollar index .DXY was 0.1% lower at 97.390, having
fallen earlier on expectations that a prolonged U.S.-China trade
war would have a negative impact on American economic growth.
The Japanese yen JPY= rose to its highest against the
dollar since March 2018 - barring a flash crash in January this
year - as investors ramped up bets that the safe-haven currency
could gain more if the trade conflict is prolonged. It was last
0.38% stronger against the dollar at 105.26.
"The stronger yen was at or near 2019 highs against its U.S.
counterpart on prospects of a long drawn-out U.S.-China trade
war. The longer the trade war drags on, the more likely it would
weigh (on) the global outlook and crimp the world economy, a
negative for market morale," said Joe Manimbo, senior market
analyst at Western Union Business Solutions.
Goldman Sachs analysts on Sunday said they no longer
expected Washington and Beijing to come to a trade agreement
before the 2020 presidential election. They lowered their
forecast for fourth-quarter U.S. growth and said the chances a
protracted trade war would lead to recession were rising.
This week, market attention will be on Chinese retail sales
and industrial output for July, due out on Wednesday, to gauge
the trade war's impact on domestic activity.
Investors will also be focused on the U.S. Federal Reserve's
annual symposium at Jackson Hole, Wyoming, later this month,
seeking greater clarity on the future path of interest rates.
Markets are expecting two to three additional rate cuts from the
Fed by the end of the year.