FOREX-Dollar off one-week highs on trade hopes; long dollar positions cut

* Dollar flat ahead of Fed meeting on Wednesday
* EU leaders expected to grant Brexit extension on Monday or
Tuesday
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Elizabeth Howcroft
Oct 28 (Reuters) - The dollar slipped on Monday off one-week
highs against a basket of currencies as hopes of a Sino-American
trade-deal encouraged a move away from safe-haven assets and
focus grew on slowing U.S. economic momentum.
The greenback held on to most of the gains from last week
when it rose 0.5% .DXY , easing 0.06% after news on Saturday
that the U.S. and China are "close to finalizing" some parts of
a trade agreement. In a possible sign of waning dollar bullishness, speculators
slashed their long-held long dollar positions to $15.31 billion
as of Oct. 22, versus $20.79 billion the previous week,
according to calculations by Reuters and the U.S. Commodity
Futures Trading Commission.
This is the smallest long position since Sept. 17.
The dollar was up 0.1% against the offshore yuan CNH=EBS ,
to its strongest levels in more than six weeks, while the
onshore yuan saw its strongest close in ten weeks CNY=CFXS .

Investors are focused on the U.S. Federal Reserve meeting on
Wednesday, when policymakers are expected to cut interest rates
- a move which is already priced in. "The U.S. economy will come straight back on to the top of
the agenda, dovetailing into that is the expectation that there
could be a trade deal this month," said Jane Foley, senior FX
strategist at Rabobank.
"There's still an awful lot of discrepancy and uncertainty
in the markets as to what the Fed will do next year," she said,
adding that "the market will be looking for clues as to which
way that might go".
MUFG currency analyst Lee Hardman said market participants
expect rates to be cut by 25 basis points.
"It is now seen as more likely to be the last rate cut
delivered this year," he wrote in a note.
The euro was broadly firmer, up 0.1% against the dollar
EUR=EBS and 0.2% against the yen EURJPY=EBS , while the pound
was up 0.1% at $1.2848 ahead of the EU's decision on a new
Brexit deadline, expected on Monday GBP=D3 .
"The outlook for the euro has improved along with
expectations for a trade deal and a Brexit deal," Foley said,
noting that a Brexit deal would be not only good for both the UK
and eurozone economy.
The European Central Bank's outgoing president, Mario
Draghi, will speak in Frankfurt on Monday.
In a busy week for central banks, investors will also watch
the Bank of Japan's policy decision on Thursday, which is
expected to be a close call on whether to unleash more stimulus
or hold fire for now