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FOREX-Dollar steadies as markets hit holding pattern, eyeing U.S-China trade talks

Published 08/10/2019, 01:25
Updated 08/10/2019, 01:30
© Reuters.  FOREX-Dollar steadies as markets hit holding pattern, eyeing U.S-China trade talks
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* Dollar mostly holds overnight gains

* Moves slight as markets in holding pattern, watching trade

talks

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook

SINGAPORE, Oct 8 (Reuters) - The dollar found support on

Tuesday while investors waited for an outcome from Sino-U.S.

trade talks in Washington, with caution the catchcry as neither

side showed any signs of giving ground at the negotiations.

The greenback had gained overnight as risk aversion, and low

expectations for a breakthrough trade deal, drove trade-exposed

currencies such as the Australian and New Zealand dollars, the

Chinese yuan and Korean won lower.

The dollar mostly held those gains Asian morning trade, but

moves were slight as currency markets find themselves in a

holding pattern. Traders are looking to news from the

discussions, and a Chinese service-sector survey, due out at

0145 GMT, to drive sentiment.

"No-one can be confident about these talks, except our

inclination has long been that the talks are more likely to

disappoint than to please market expectations," said Sean

Callow, currency strategist at Westpac in Sydney.

"The U.S. and China are just too far apart on key issues,"

he said, leaving only a very limited deal in prospect.

The dollar retreated marginally from a week-high touched on

the Japanese yen overnight to sit at 107.30 yen JPY= . It edged

lower on the euro EUR= to steady around $1.0971 as the single

currency slowly climbs from a 2-1/2 year low hit last week.

It was flat against the Australian dollar AUD= at $0.6728

and steady against the New Zealand dollar NZD= at $0.6286.

Against a basket of currencies .DXY the dollar steadied at

98.976.

The Chinese yuan, the most sensitive currency to the trade

negotiations, was flat in offshore trade at 7.1330 per dollar

CNH= , with onshore trade to resume at 0130 GMT after a

week-long break for China's national day holidays.

Deputy-level meetings between U.S. and Chinese trade

negotiators began in Washington on Monday, with little immediate

signs of progress. Top-level talks are scheduled to resume on Thursday, when

Chinese Vice Premier Liu He meets with U.S. Trade Representative

Robert Lighthizer and Treasury Secretary Steven Mnuchin.

The talks are getting underway about a week before a

scheduled increase in U.S. tariffs on $250 billion worth of

Chinese goods, to 30% from 25%.

U.S. President Donald Trump has said the tariff increase

will take effect if no progress is made in the negotiations. The

U.S. also added another 28 Chinese public security bureaus and

companies to a trade blacklist on Monday.

"It seems the best we can hope for this week is for a truce

to continue and for Trump to extend the deadline for the next

lift in tariffs," said Tapas Strickland, an economist at

National Australia Bank in Sydney.

Sterling slipped slightly as investors grow increasingly

concerned about a lack of progress between Britain and the

European Union to agree a Brexit withdrawal deal. Sterling last

traded at $1.2287 per pound. GBP=

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