* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(New throughout; adds analyst quotes; changes dateline,
previous LONDON)
By Kate Duguid
NEW YORK, Oct 15 (Reuters) - The dollar gained for a second
consecutive day on Tuesday as fading optimism over the latest
China-U.S. trade truce prompted traders to buy the greenback
after a selloff last week.
The combination of some tepid U.S. data and hopes of a
breakthrough in a protracted trade conflict between Washington
and Beijing prompted funds to unwind some of their dollar long
bets recently, putting the U.S. currency under selling pressure.
"After the recent flushout of dollar long bets, currency
investors have reassessed the short-term outlook and have come
to the view that there is not going to be much of a movement on
the trade issue," said Stephen Gallo, European Head of FX
Strategy at BMO.
Reports of a "Phase 1" trade deal between the United States
and China last week had earlier cheered markets but the dearth
of details around the agreement has since curbed this enthusiasm
with oil prices extending declines, Chinese stocks weaker and
the safe-haven yen JPY= holding gains versus the
dollar. MKTS/GLOB
"It's a pause in the trade wars, but risk markets need a
reversal of existing tariffs and a signal that the December ones
will get scrapped," said Mark McCormick, global head of foreign
exchange strategy at TD Securities.
Against a broad basket of its rivals .DXY , the dollar was
up 0.13% to 98.583 and around 1% away from a near 2-1/2 year
high of 99.667 hit earlier this month.
Fading hopes over a trade deal also pulled the Chinese
currency lower. China's yuan CNH= slipped in offshore markets,
a day after reaching a one-month high. The offshore yuan traded
at 7.087 against the dollar, off Monday's high of 7.051.
Elsewhere, sterling trimmed some of its earlier gains as
officials raced to put a Brexit deal in place. The European
Union gave Britain until the end of Tuesday to work out a deal
that can be approved at a leaders' summit this week but said a
delay to the Oct. 31 scheduled departure date and a breakdown of
talks were also still on the cards. The pound GBP= was up 0.5% at $1.267, trimming some of its
gains after being up nearly 0.7% in early London trading.
Though a monthly survey showed the mood among German
investors worsened less in October than expectations, the euro
failed to get much of a boost from the data with the single
currency EUR= down 0.33% at $1.10.