FOREX-Dollar steady before holidays, sterling slips on Brexit worries

* Dollar supported by Friday's U.S. economic growth data
* Aussie, Kiwi rally on Chinese trade optimism

(Updates to U.S. afternoon trading)
By Saqib Iqbal Ahmed
NEW YORK, Dec 23 (Reuters) - The dollar was little-changed
against a basket of currencies on Monday, holding near a
two-week high, in holiday-lulled trading, while sterling fell on
concerns over the British government's hard line on Brexit
talks.
The dollar index .DXY , which measures the greenback
against six major currencies, was down 0.03% at 97.658. The
index rose 0.3% on Friday after the release of upbeat U.S.
economic data late last week.
The dollar is up 1.6% for the year as measured by the dollar
index. It has broadly benefited during bouts of risk aversion -
because it is considered a safe-haven currency - and when
markets have rallied, because the U.S. economy is outperforming
other parts of the world.
"The USD's bounce last week sets it up for a modest 'Santa
rally' perhaps but we rather view scope for gains as limited in
the medium- to longer-run," Shaun Osborne, chief FX strategist
at Scotiabank, said in a note.
The dollar has also been supported since Washington and
Beijing came to an interim trade agreement earlier this month.
China said on Monday it would lower tariffs on some products
next year. Currencies linked closely to the prospects for global trade
rose on Monday, with the Aussie AUD= up 0.32% and the kiwi up
0.53%.
With the economic calendar light before the holidays,
analysts doubt major currencies will post significant moves this
week.
The future path of the dollar is likely linked to what kind
of benefits non-U.S. currencies reap from the recent easing in
trade-related tensions between the United States and China.
"With the Fed likely on hold next year, the key to a weaker
dollar in 2020 could depend on further momentum from Europe,"
said Edward Moya, senior market analyst at OANDA.
"Europe is likely to benefit the most from continued
progress with the U.S.-China trade war and if we see any hints
of a manufacturing rebound, the euro could eye the 1.15 level,"
Moya said.
The euro was 0.14% higher on Monday at $1.1093.
The Canadian dollar CAD= shook off early weakness against
the greenback to trade near flat on the day at 1.3147 to the
greenback, or 76.04 U.S. cents.
Canada's economy unexpectedly shrank by 0.1% in October, the
first monthly decline since February, partly because of a U.S.
auto strike that hit manufacturing, Statistics Canada data
indicated on Monday. Sterling fell to a three-week low against the dollar, pulled
down in holiday-thinned trade by nagging concern over the
British government's hard line on Brexit talks. The pound was
0.54% lower. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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