FOREX-Dollar steadies as markets hit holding pattern, eyeing U.S-China trade talks

* Dollar mostly holds overnight gains
* Moves slight as markets in holding pattern, watching trade
talks
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook
SINGAPORE, Oct 8 (Reuters) - The dollar found support on
Tuesday while investors waited for an outcome from Sino-U.S.
trade talks in Washington, with caution the catchcry as neither
side showed any signs of giving ground at the negotiations.
The greenback had gained overnight as risk aversion, and low
expectations for a breakthrough trade deal, drove trade-exposed
currencies such as the Australian and New Zealand dollars, the
Chinese yuan and Korean won lower.
The dollar mostly held those gains Asian morning trade, but
moves were slight as currency markets find themselves in a
holding pattern. Traders are looking to news from the
discussions, and a Chinese service-sector survey, due out at
0145 GMT, to drive sentiment.
"No-one can be confident about these talks, except our
inclination has long been that the talks are more likely to
disappoint than to please market expectations," said Sean
Callow, currency strategist at Westpac in Sydney.
"The U.S. and China are just too far apart on key issues,"
he said, leaving only a very limited deal in prospect.
The dollar retreated marginally from a week-high touched on
the Japanese yen overnight to sit at 107.30 yen JPY= . It edged
lower on the euro EUR= to steady around $1.0971 as the single
currency slowly climbs from a 2-1/2 year low hit last week.
It was flat against the Australian dollar AUD= at $0.6728
and steady against the New Zealand dollar NZD= at $0.6286.
Against a basket of currencies .DXY the dollar steadied at
98.976.
The Chinese yuan, the most sensitive currency to the trade
negotiations, was flat in offshore trade at 7.1330 per dollar
CNH= , with onshore trade to resume at 0130 GMT after a
week-long break for China's national day holidays.
Deputy-level meetings between U.S. and Chinese trade
negotiators began in Washington on Monday, with little immediate
signs of progress. Top-level talks are scheduled to resume on Thursday, when
Chinese Vice Premier Liu He meets with U.S. Trade Representative
Robert Lighthizer and Treasury Secretary Steven Mnuchin.
The talks are getting underway about a week before a
scheduled increase in U.S. tariffs on $250 billion worth of
Chinese goods, to 30% from 25%.
U.S. President Donald Trump has said the tariff increase
will take effect if no progress is made in the negotiations. The
U.S. also added another 28 Chinese public security bureaus and
companies to a trade blacklist on Monday.
"It seems the best we can hope for this week is for a truce
to continue and for Trump to extend the deadline for the next
lift in tariffs," said Tapas Strickland, an economist at
National Australia Bank in Sydney.
Sterling slipped slightly as investors grow increasingly
concerned about a lack of progress between Britain and the
European Union to agree a Brexit withdrawal deal. Sterling last
traded at $1.2287 per pound. GBP=