December 11, 2018 / 3:55 PM / 7 months ago

FOREX-Dollar firms on hopes for U.S.-China trade talks, pound steadies

    * U.S., China signal movement to resolve trade conflict
    * Speculators' net dollar longs highest in near 2 years - CFTC
    * Sterling stabilizes after tumbling on May scrapping Brexit vote
    * Euro softens on unrest in France, awaits ECB meeting
    * Graphic: World FX rates in 2018

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, Dec 11 (Reuters) - The dollar edged higher against a basket of currencies on Tuesday,
hovering near a two-week high, as China and the United States laid out a plan on the next stage of their
trade talks to avert a trade war between the world's two biggest economies.
    The sterling bounced up from 20-month lows as Prime Minister Theresa May sought support from European
leaders to change her Brexit deal, with investors weighing chances of a chaotic British exit from the
European Union.
    "The prospects for U.S. and China have brightened. That's a relief for the dollar," said Peter Ng,
senior foreign currency trader at Silicon Valley Bank in Santa Clara, California.
    White House officials and China's commerce ministry said Chinese Vice Premier Liu He, U.S. Treasury
Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer spoke on a telephone call on
Tuesday, but offered no details what they discussed.
    Still the call was seen as a step to ratchet down trade tension between Beijing and Washington,
analysts said.
    Investors fear an all-out trade war between the two nations would hurt global economic growth, which
is already showing signs of losing momentum.
    At 10:37 a.m. (1537 GMT), an index that tracks the greenback against six major peers was up
0.13 percent at 97.346. Earlier Tuesday, it touched 97.354, which was the highest since Nov. 28.
    The dollar's gains have been limited by the recent decline in U.S. bond yields stemming from worries
about weakening global growth, a pickup in market volatility and bets the Federal Reserve may pause with
its rate increases sooner than previously thought.
    Positioning data released late Monday suggested the dollar may fall as speculators increased their net
long bets in the greenback to their highest level since December 2016.
    The sterling steadied following steep losses on Monday in reaction to May cancelling a parliamentary
vote on her Brexit agreement to seek more concessions.
    Traders weighed possible outcomes for Britain and its relationship with the European Union. They
include a disorderly no-deal Brexit, another referendum on EU membership, or a last-minute renegotiation
of May's deal with Brussels.
    The sterling was up 0.02 percent at $1.2562 after falling to $1.2507 on Monday which was the lowest
since April 2017.
    The euro slipped 0.29 percent at 90.135 pence after reaching 90.875 pence, which was its strongest
since Aug. 28.
    The single currency was also bogged down by concerns over protests in France against inequality and
President Emmanuel Macron's economic reforms.
    Investors were also focused on the European Central Bank's economic assessment of the euro zone, due
on Thursday.
    The euro was 0.29 percent lower at $1.1322 and down 0.36 percent at 128.29 yen.
    Currency bid prices at 10:39AM (1539 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1321        $1.1355     -0.30%         +0.00%      +1.1400     +1.1320
 Dollar/Yen       JPY=        113.2800       113.3300    -0.04%         +0.00%      +113.3500   +113.0100
 Euro/Yen         EURJPY=     128.25         128.70      -0.35%         +0.00%      +128.9800   +128.2700
 Dollar/Swiss     CHF=        0.9914         0.9903      +0.11%         +0.00%      +0.9918     +0.9864
 Sterling/Dollar  GBP=        1.2561         1.2559      +0.02%         +0.00%      +1.2638     +1.2553
 Dollar/Canadian  CAD=        1.3402         1.3393      +0.07%         +0.00%      +1.3421     +1.3378
 Australian/Doll  AUD=        0.7208         0.7189      +0.26%         +0.00%      +0.7224     +0.7185
 Euro/Swiss       EURCHF=     1.1226         1.1247      -0.19%         +0.00%      +1.1258     +1.1227
 Euro/Sterling    EURGBP=     0.9011         0.9040      -0.32%         +0.00%      +0.9049     +0.9007
 NZ Dollar/Dolar  NZD=        0.6888         0.6869      +0.28%         +0.00%      +0.6911     +0.6863
 Dollar/Norway    NOK=        8.5614         8.5617      +0.00%         +0.00%      +8.5673     +8.5092
 Euro/Norway      EURNOK=     9.6930         9.7225      -0.30%         +0.00%      +9.7321     +9.6915
 Dollar/Sweden    SEK=        9.0870         9.0922      -0.41%         +0.00%      +9.0990     +9.0285
 Euro/Sweden      EURSEK=     10.2880        10.3300     -0.41%         +0.00%      +10.3380    +10.2800

 (Additional reporting by Tom Finn, Tom Wilson in LONDON
Shinichi Saoshiro in TOKYO
Editing by Andrew Heavens and Phil Berlowitz)
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