FOREX-Dollar supported before Fed meeting, Brexit delay in focus

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Dollar in focus as Fed meets, BOJ likely to stay pat
* Brexit process dogs sterling
* Trade war and Brexit woes pose risk to global economy

By Stanley White
TOKYO, Oct 28 (Reuters) - The dollar traded near the highest
in more than two months versus the yen on Monday ahead of a U.S.
Federal Reserve meeting this week where policymakers are
expected to cut interest rates but emphasise their reluctance to
ease policy further.
Sterling edged lower versus the dollar and the euro, with an
agreement expected later on Monday to delay Britain's divorce
from the European Union to Jan. 31 after Prime Minister Boris
Johnson failed to win approval for his Brexit timetable.
The market focus will shift to the Fed meeting ending Oct.
30 and a Bank of Japan meeting ending Oct. 31. The Fed is
expected to cut interest rates for a third time this year, but
fixed income analysts say this is largely priced into the
market. The BOJ is leaning toward keeping policy on hold next week,
but the decision is a close call as policymakers struggle with
threats to the global outlook from the U.S.-China trade war and
Brexit. "A Fed rate cut is already factored in, but the dollar could
be bought back if the Fed somehow signals it won't cut rates
further," said Yukio Ishizuki, foreign exchange strategist at
Daiwa Securities in Tokyo.
"Until we can confirm this, traders are likely to adjust
their existing positions in the dollar."
The dollar traded at 108.72 yen JPY=EBS on Monday, close
to 108.94 yen, which is the highest since Aug. 1.
The greenback EUR=EBS was quoted at $1.1084 per euro,
close to its strongest in more than a week.
The dollar index .DXY against a basket of six major
currencies stood at 97.827, also near its highest in more than a
week.
The U.S. currency got a mild boost on Friday after the U.S.
Trade Representative's office said it is "close to finalizing"
some parts of a trade agreement with China. On Saturday China's Ministry of Commerce said "technical
consultations" on some parts of a trade agreement were basically
completed, but investors are likely to remain sceptical because
even a partial deal would not eliminate risks posed by trade
friction.
In the offshore market, the yuan edged to CNH=D3 7.0450
per dollar on Monday, the strongest since Sept. 13, but
investors are likely to take their cue from how the yuan trades
onshore when the market opens around 0130 GMT.
The Fed meeting this week is widely expected to result in a
cut in interest rates of 25 basis points, and that has been
priced in, but some analysts expect the Fed to sound "hawkish"
by signalling it is reluctant to cut rates further.
The pound GBP=D3 edged lower to $1.2828 and eased slightly
to 86.42 pence per euro EURGBP=D3 .
The EU bloc's 27 ambassadors will meet at 0900 GMT on Monday
in Brussels to agree on a three-month delay from the current
Brexit date of Oct. 31, diplomatic sources told Reuters.
More than three years after Britons voted in a referendum to
quit the EU, the country and its parliament remain divided over
how, when and even whether to leave, and the matter has
triggered a spiralling political crisis in the UK.