* U.S., Chinese negotiations describe talks in positive
terms
* Yen sold, Aussie and kiwi rally
* Moves slight as caution abounds
By Tom Westbrook
SINGAPORE, Sept 23 (Reuters) - The dollar was supported on
Monday, with the market's risk appetite delicately balanced
after talks in Washington between U.S. and Chinese trade
deputies were described as "productive".
The greenback gained against the safe-haven yen, but edged
lower versus trade-exposed currencies, such as the Australian
and New Zealand dollars, which rallied on the cautious risk-on
mood.
Moves were relatively slight, however, with volumes dampened
by a public holiday in Japan and by the anticipation that
central banks on both sides of the Tasman Sea will sound dovish
in scheduled remarks this week.
"I think there's still a lot of nervousness around," said
Shane Oliver, chief economist at AMP Capital in Sydney, citing
Middle East tensions and the whipsawing fortunes of the
U.S-China trade dispute as key drivers.
"These things have a habit of escalating and de-escalating
and then escalating again...it is a bit finely balanced at the
moment," he said.
The dollar rose a touch over 0.1% to buy 107.70 Japanese yen
JPY= . It gave up the roughly same amount of ground to the
Australian and New Zealand dollars, trading at $0.6768 on the
Aussie AUD=D3 and $0.6268 to the kiwi NZD=D3 .
Against a basket of currencies .DXY the dollar was mostly
flat at 98.500 and it held steady at $1.1017 per euro EUR= .
The British pound GBP= held at $1.2476 after dropping from
a two-month high on Friday when Ireland's foreign minister said
Britain and the European Union were not yet close to a Brexit
deal.
A U.S.-China trade breakthrough had seemed unlikely after
President Donald Trump told reporters on Friday he was "not
looking" for a partial deal, and Chinese officials then
cancelled goodwill visits to U.S. farmers. But both sides later published positive statements, with the
U.S. Trade Representative's office describing the talks as
"productive" and China's Commerce Ministry calling them
"constructive." October's high-level talks remain on track.
China's yuan CNH= strengthened 0.2% to 7.1025 per dollar
in offshore trade, though few are expecting much of a rally or
for the mood to hold should any signs of doubt emerge over a
breakthrough in U.S.-China trade negotiations.
"At some point the fundamentals will take over," said Mathan
Somasundaram, a strategist at brokerage Blue Ocean Equities in
Sydney. "(The talks) are bringing back a bit of risk-on...but I
think we will be in a bit of a holding pattern waiting to see."
September manufacturers' surveys in Europe and the United
States due later on Monday are also likely to provide the latest
insight into the state of a world economy hit by slowing global
demand and the trade war.
The Chicago Fed National Activity Index is also due, while
New York Fed President John Williams makes a scheduled speech
after the central bank on Friday said it plans more intervention
in the U.S. funding market to bolster dollar liquidity.
(Editing by Jacqueline Wong)