* Dollar mostly holds overnight gains
* Moves slight as markets in holding pattern, watching trade talks
* Aussie and kiwi perk up, move may be short-lived
* Graphic: World FX rates in 2019
By Tom Westbrook and Stanley White
SINGAPORE/TOKYO, Oct 8 (Reuters) - The dollar found support on
Tuesday while investors awaited the outcome from crucial Sino-U.S.
trade talks in Washington, with many staying cautious as neither side
has shown signs of giving ground at the negotiations.
The Chinese yuan firmed in onshore and offshore trade as Chinese
financial markets reopened after a week-long holiday.
The Australian and New Zealand dollars, whose fortunes are often
linked with global trade, edged higher as some investors reduced
bearish bets. Dealers warned this move could fade depending on the
tone of the trade talks in Washington.
Hopes for a breakthrough are not high, but some investors are
trying to scale back their positions, at least temporarily, because
the outcome of the trade negotiations cannot be predicted.
"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 rose 0.14% to 107.18 yen , approaching a one-week
high reached on Monday.
Against a basket of currencies , the dollar steadied at 98.959.
In the onshore market, the yuan traded at 7.1263 per dollar,
stronger than its previous close of 7.1480 on Sept. 30. In the
offshore market, the yuan gained around 0.1% to 7.1257 per dollar.
Deputy-level meetings between U.S. and Chinese trade negotiators
began in Washington on Monday, with little immediate signs of
Top-level talks are scheduled to begin on Thursday, when Chinese
Vice Premier Liu He meets U.S. Trade Representative Robert Lighthizer
and Treasury Secretary Steven Mnuchin.
The talks are getting under way 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 United States
on Monday added 28 Chinese public security bureaus and companies to a
Masaru Ishibashi, joint general manager of the trading department
at Sumitomo Mitsui Banking Corp in Tokyo, said the dollar is
benefiting from "waning pessimism about the U.S. economy".
"In addition, speculators are trying to lighten their
positions related to the trade war, which is helping some commodity
currencies," he said. "The next move depends entirely on
what the trade talks produce."
The Australian dollar rose 0.24% to $0.6748, while the New
Zealand dollar advanced by 0.46% at $0.6318.
The antipodean currencies have generally been on a downtrend since
early September as weaker-than-expected economic indicators pointed to
a need for more policy easing by Australia and New Zealand.
However, both the Aussie and the kiwi have moved up from recent
lows, which dealers say is partly because some investors squared off
positions before the trade talks.
The euro held steady around $1.0975 as the single currency
slowly gets some distance from a 2-1/2 year low hit last week.
Sterling last traded at $1.2296. The pound has been confined to
a narrow range recently, but investors are growing increasingly
concerned about a lack of progress between Britain and the European
Union to agree a Brexit withdrawal deal.
(Reporting by Tom Westbrook and Stanley White; Editing by Lincoln
Feast and Richard Borsuk)
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