FOREX-Dollar tumbles as safe-haven bid diminishes on Brexit, trade optimism

    * Brexit deal can be done by Oct. 31 -Ireland
    * China willing to reach agreement with U.S. -Vice Premier
Liu He
    * U.S. core CPI slips; headline CPI unchanged in September
    * Markets expect Fed rate cut later this month
    * Graphic: World FX rates in 2019

 (Adds new comment, Brexit news, sterling moves, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 10 (Reuters) - The dollar fell to two-week
lows on Thursday, with safe-haven demand for the currency waning
as investors grew optimistic about a U.S.-China trade deal as
well as a potential agreement on Britain's exit from the
European Union.
    Sterling jumped to a two-week high versus the dollar and
posted its largest daily percentage gain in seven months. The
pound was last up 1.8% at $1.2432.
    "With a Brexit deal looking more likely and U.S.-China talks
showing more progress, it's just clear that the dollar is losing
some safe-haven demand," said Juan Perez, senior currency
trader, at Tempus Inc in Washington.
    On Thursday, Irish Prime Minister Leo Varadkar said a Brexit
deal could be clinched by the end of October to allow the United
Kingdom to leave the European Union in an orderly fashion, after
what he called a very positive meeting with Boris Johnson.
Ireland is at the center of what has been a prolonged Brexit
    "Both prime ministers came out with the most hope in a
while," said Tempus' Perez. "The move in the pound of more than
1-1/2 percent in its favor makes sense ... but the key is can
parliament pass this Brexit deal if it does happen."
    Aside from Brexit, investors were hopeful about a potential
U.S.-China trade agreement.
    Chinese Vice Premier Liu He on Thursday said China was
willing to reach an agreement with the United States on matters
both sides care about to prevent any further escalation in
tensions, the state news agency Xinhua reported.
    Liu, China's top trade negotiator, made his comment in
Washington when he met with U.S. officials. Trade talks between
the two countries started on Thursday.
    "If we get some type of trade deal or mini-agreement or
mandate, you're going to see that being supportive of European
assets," said Edward Moya, senior market analyst, at OANDA in
New York. "We're seeing the euro now back above $1.10, which has
been the resistance." 
    The markets largely shrugged off core U.S. inflation data
that was lower than forecast.
    In afternoon trading, the dollar index posted its biggest
daily drop in five weeks. It fell 0.5% to 98.64, after
earlier sliding to a two-week trough. 
    The yen, another safe haven in times of geopolitical and
financial stress, also fell to a one-week trough against the
dollar, weakening as well against riskier currencies such as the
Australian dollar.
    The dollar was last up 0.4% against the Japanese yen at
107.87 yen.
    The euro, meanwhile, rose to a two-week high, lasting
changing hands at $1.1014, up 0.4%.
    The dollar was little moved after data showed U.S. consumer
prices were unchanged in September, while underlying inflation
slipped. The report supported expectations the Federal Reserve
will cut interest rates in October for the third time this year.
    The U.S. consumer price index edged up 0.1% in August.
Economists polled by Reuters had forecast the CPI nudging up
0.1% in September. Excluding the volatile food and energy
components, the CPI climbed 0.1% after gaining 0.3% for three
straight months.
    Market bets for a quarter-point U.S. rate cut swelled to 85%
at its next policy meeting in October, compared to 53% a month
    Currency bid prices at 2:28PM (1828 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1009        $1.0969     +0.36%         -4.01%      +1.1034     +1.0972
 Dollar/Yen       JPY=        107.8900       107.4600    +0.40%         -2.14%      +107.9700   +107.0400
 Euro/Yen         EURJPY=     118.79         117.90      +0.75%         -5.89%      +118.9400   +117.5800
 Dollar/Swiss     CHF=        0.9962         0.9956      +0.06%         +1.51%      +0.9972     +0.9915
 Sterling/Dollar  GBP=        1.2427         1.2204      +1.83%         -2.59%      +1.2468     +1.2207
 Dollar/Canadian  CAD=        1.3291         1.3330      -0.29%         -2.54%      +1.3345     +1.3269
 Australian/Doll  AUD=        0.6763         0.6723      +0.59%         -4.06%      +0.6774     +0.6711
 Euro/Swiss       EURCHF=     1.0969         1.0925      +0.40%         -2.52%      +1.0977     +1.0900
 Euro/Sterling    EURGBP=     0.8857         0.8986      -1.44%         -1.41%      +0.9019     +0.8837
 NZ               NZD=        0.6321         0.6291      +0.48%         -5.90%      +0.6335     +0.6278
 Dollar/Norway    NOK=        9.1252         9.1721      -0.51%         +5.63%      +9.1816     +9.1096
 Euro/Norway      EURNOK=     10.0455        10.0628     -0.17%         +1.41%      +10.0878    +10.0434
 Dollar/Sweden    SEK=        9.8424         9.9586      -0.81%         +9.80%      +9.9583     +9.8191
 Euro/Sweden      EURSEK=     10.8371        10.9258     -0.81%         +5.58%      +10.9325    +10.8310
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Nick
Zieminski and Tom Brown)