FOREX-Dollar eases with U.S.-China trade in focus

* Dollar index edges lower
* Trade war headlines continue to hog market spotlight

(New throughout, updates rates and adds comments post-U.S.
market open; new byline, changes dateline from London)
By Saqib Iqbal Ahmed
NEW YORK, Nov 21 (Reuters) - The dollar edged lower against
other major currencies on Thursday, with investors focused on
the latest developments in a bitter 16-month long trade dispute
between the United States and China that has weighed on the
world economy.
Risk sentiment improved a little on Thursday after a report
in the South China Morning Post said the United States could
delay tariffs on Chinese imports even if a deal has not been
reached by Dec. 15, when tariffs kick in on goods including
electronics and Christmas decorations.
"The U.S. dollar is trading mostly lower as currency
investors react to positive China trade headlines - China
expressing 'cautious optimism' on reaching a Phase 1 deal and
Beijing inviting U.S. negotiators for more talks," Shaun
Osborne, chief FX strategist at Scotiabank in Toronto, said in a
note.
The dollar index .DXY , which compares the dollar against
six major currencies, was down 0.06% at 97.873.
Investors were taking heart from a report in the Wall Street
Journal that China has invited top U.S. trade negotiators for a
new round of face-to-face talks in Beijing. Chinese Vice Premier Liu He, also the chief trade
negotiator, said he was "cautiously optimistic" on a phase one
deal, according to a report by Bloomberg. Increased trade tensions between Washington and Beijing have
generally been supportive of the dollar as investors view the
United States to be in better shape than other economies to
weather a trade war.
On Wednesday, the U.S. House of Representatives passed two
bills to back protesters in Hong Kong and send a warning to
China about human rights, with President Donald Trump expected
to sign them into law. "The bills approved by the U.S. Congress regarding Hong Kong
further antagonize the relationship, revealing the confrontation
between the U.S. and China transcends the Trump Administration,"
said Marc Chandler, chief market strategist at Bannockburn
Global Forex.
Despite the support the dollar has enjoyed from safe-haven
flows due to increased trade tensions, the greenback may be set
to weaken, Scotiabank's Osborne said.
"We continue to view the longer-run outlook for the U.S.
dollar as more challenging amid slowing growth and increasing
political uncertainty," he said.
Sterling was down 0.5% against the greenback after British
opposition leader Jeremy Corbyn unveiled his election manifesto
on Thursday setting out how a Labour government would transform
Britain with "the most radical and ambitious plan" in decades.
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Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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