FOREX-Dollar erases post-Fed bounce, sterling up on Brexit deal hopes

* Dollar gives up gains against most major currencies
* Sterling hits two-month high on Brexit deal hopes
* Aussie, kiwi near multi-week lows
* Chinese rate easing eyed

By Tom Westbrook
SINGAPORE, Sept 20 (Reuters) - The dollar nursed losses
against most major currencies on Friday, as central banks in
Switzerland and the UK refrained from following the Federal
Reserve in cutting rates, while risk appetite ebbed on caution
about U.S-China trade talks.
Sterling GBP= hit a two-month high of $1.2560 against the
greenback overnight after European Commission President
Jean-Claude Juncker said he thought Brussels could reach a deal
with Britain to leave the European Union. The Swiss National Bank, the Bank of England and the Bank of
Japan all kept their policies on hold on Thursday. Their
currencies rose and mostly held gains in Asian trade.
The exception was the Antipodes, where the Australian and
New Zealand dollars languished around two-week lows after a slew
of soft data capped by an uptick in Australian unemployment that
prompted a rush to price in fresh rate cuts for October.
"Both the Aussie and kiwi have underperformed this week and
I blame the Aussies for that one," said Jason Wong, senior
market strategist at BNZ in Wellington.
"The unemployment rate ticking up yesterday has fuelled
expectations that the (Reserve Bank of Australia) is going to
cut next month as opposed to November, and the kiwi's been in
that downdraft."
The Australian dollar AUD=D3 held at $0.6793 in morning
trade, close to its lowest since Sept. 4, while the New Zealand
dollar NZD=D3 hit $0.6297, its weakest since Sept. 3.
Economists at Citi on Friday joined Australia's major banks
in predicting an October rate cut. The dollar was steady buying 108.00 Japanese yen JPY= ,
after falling from close to a seven-week peak hit on Thursday.
It was slightly weaker against the Swiss franc CHF= at
0.9921 per dollar and the euro at $1.1050 and flat against a
basket of currencies .DXY at 98.334.
Investors are also focused on U.S.-China trade talks in
Washington, aimed at laying the groundwork for high-level
discussions next month.
However, most traders are cautious. Few signs of progress
have emerged and with a wide gulf between both sides remaining,
it 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.
"Both of those currencies have weakened in the last three or
four days," he said. "I think market participants are going to
need something concrete to really rally...at the moment there's
just not enough."
The Chinese yuan CNH= steadied to just under a one-week
low at 7.0990 per dollar in offshore trade, with investors
eyeing a possible benchmark lending rate reduction later in the
day. China's central bank is trying to guide borrowing costs
lower to help an economy suffering from the trade war.