FOREX-Dollar rebounds as Washington, Beijing tamp down trade tensions

* Dollar index firm after Monday's 0.4% gain
* Beijing, Washington say willing to resolve trade dispute
* Fed easing outlook keeps tab on dollar
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Hideyuki Sano
TOKYO, Aug 27 (Reuters) - The dollar held firm on Tuesday
after some signs of rapprochement between Washington and Beijing
soothed investors' nerves after trade tensions between the
world's biggest economies escalated yet again late last week and
over the weekend.
The dollar traded at 106.02 yen JPY= , flat in early Asia
after having rebounded from near eight month lows of 104.46
touched on Monday.
Speaking on the sidelines of the G7 summit of world leaders
in France on Monday, U.S. President Donald Trump said Chinese
officials had contacted U.S. trade counterparts overnight and
offered to return to the negotiating table. His comments came after Vice Premier Liu He, China's chief
negotiator with Washington, said Beijing was willing to resolve
the trade dispute through "calm" negotiations. The remarks supported the dollar, which had been shaken by
Trump's announcement on Friday of an additional 5% duty on $550
billion in targeted Chinese goods.
"I was quite surprised by the big gains in the dollar/yen
overnight. But it is not clear what the U.S. and China will do
next, and I would expect the dollar to consolidate for the time
being," said Kyosuke Suzuki, director of forex at Societe
Generale.
The euro stood at $1.1101 EUR= , having shed 0.4% in the
previous session.
The dollar index =USD rose 0.40% on Monday and last stood
at 98.026.
The safe-haven Swiss franc also stepped back to 1.0867 per
euro EURCHF=R from Monday's 1.0840, reflecting the slight
easing in risk aversion.
Yet, despite both Washington and Beijing showing a
willingness to return to the negotiating table, there is still
trepidation in financial markets given the absence of a clear
path towards resolving a dispute that has dragged on for more
than a year and hurt global growth, corporate profits and
investments.
And analysts fear the planned tariff hikes could cause more
damage to both the U.S. and Chinese economies and global supply
chains.
The mounting risks to growth raises the chance of further
monetary easing by the Federal Reserve, which has been under
pressure from Trump to make massive rate cuts, undermining the
dollar's yield attraction.
Sterling traded at $1.2221 GBP=D4 , after a 0.5% fall on
Monday as investors reassessed whether British Prime Minister
Boris Johnson had made any progress in convincing the European
Union to renegotiate the Brexit agreement.
Johnson said on Monday he was prepared to take Brexit talks
with the European Union down to the very last minute before the
Oct. 31 exit deadline, and if necessary to take a decision to
leave without a deal on that day.