* Dollar gives up gains against most major currencies
* Sterling hits two-month high on Brexit deal hopes
* Aussie and kiwi on track for weekly losses
* Chinese rate easing seen less than some expected
By Tom Westbrook
SINGAPORE, Sept 20 (Reuters) - The dollar drifted lower on Friday
after central banks in Switzerland and the UK refrained from following
the Federal Reserve in cutting rates, and risk appetites ebbed on
caution about U.S-China trade talks.
Sterling hit a two-month high of $1.2566 against the greenback,
after European Commission President Jean-Claude Juncker said he
thought Brussels could reach a deal with Britain to leave the European
The Swiss National Bank, the Bank of England and the Bank of Japan
all left their policies unchanged on Thursday. Their currencies rose,
with the Japanese yen and Swiss franc
both adding almost 0.2%, supported by safe-haven buying.
"What we're looking at is brewing central-bank
divergence," said Chris Weston, head of research at brokerage
Pepperstone Group in Melbourne. "We're starting to see signs of
that resonating in currency markets."
The Australian and New Zealand dollars languished around two-week
lows following Thursday's slew of soft data, especially
an uptick in Australian unemployment that prompted a rush to price in
fresh rate cuts for October.
On Friday, the Aussie edged higher to around $0.6799, which is
close to its lowest since Sept. 4, while the New Zealand dollar hit
$0.6285, its weakest since Sept. 3.
The Australian and New Zealand dollars were on track for their
steepest weekly slides in close to a month, as each has given up more
Economists at Citi on Friday joined Australia's major banks in
predicting an October rate cut.
The dollar gave ground to the yen, buying 107.85, and to the Swiss
franc at 0.9910 per dollar. Against a basket of currencies
, the dollar edged lower to 92.223.
China's yuan firmed to 7.0843 per dollar after a trim to a
benchmark interest rate in China was smaller less dovish than some
market players expected.
Investors are also focused on U.S.-China trade talks in
Washington, aimed at laying the groundwork for high-level discussions
However, most traders are cautious. Few signs of progress have
emerged and with a wide gulf between both sides remaining, the issue
is weighing on the recent risk-on mood.
"If you look at the Aussie dollar or renminbi it's
faded," said Joe Capurso, senior currency strategist at the
Commonwealth Bank of Australia in Sydney.
""I think market participants are going to need
something concrete to really rally... at the moment there's just not
(Reporting by Tom Westbrook; Editing by Sam Holmes and Richard Borsuk)
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