FOREX-Dollar jumps on worries over U.S.-China trade talks

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Recasts; adds trade news, analyst quotes; changes dateline;previous LONDON)

By Kate Duguid

NEW YORK, Feb 11 (Reuters) - The dollar jumped on Monday asconcerns grew that the latest round of U.S.-China talks may notyield a deal between the world's largest economies before theMarch deadline.

High-level talks in Beijing this week are a leading focusfor investors, many of whom see little prospect for a trade dealand instead expect an extension of the March 1 deadline fordeciding whether to increase tariffs.

On "the trade process, and the hope that China will buy moreU.S. goods, we might see some headlines supportive of a warmingin trade talks. But there are also the intellectual property andtech transfer issues and we have not seen any progress on thatfront and I'm not sure we will this week," said Juan Prada,currency strategist at Barclays in New York.

The United States is expected to keep pressing China onlongstanding demands that it reform how it treats U.S.companies' intellectual property in order to seal a trade dealthat could prevent tariffs from rising on Chineseimports.

Monday morning's move in the dollar reverberated acrosscurrency markets, driving the euro to its lowest since Dec. 14at $1.127EUR= . The dollar strengthened to 110.45 Japanese yenJPY= and to $1.286 against the British pound GBP= .

Emerging market and China-sensitive currencies such as theAustralian dollar are most likely to be affected by the tradenews.

"The market was positioned in a more bearish way withrespect to the dollar, so we had stronger emerging markets inthe past month. This is a retracement of what we have seen fromthat," said Prada.

The dollar's recent strength has emerged despite the FederalReserve striking a cautious tone at its policy meeting inJanuary.

"The U.S. currency is currently in demand as a safe haven.This is reflected in the fact that the Swiss franc and theJapanese yen - also typical safe-haven currencies - have alsobeen able to appreciate since the start of the month," said ThuLan Nguyen, an FX strategist at Commerzbank in Germany.

The dollar index .DXY , a gauge of its value versus sixmajor peers, was 0.44 percent higher at 97.067.

China markets reopened on Monday morning after a one-weekholiday break, with the dollar last 0.71 percent higher versusthe yuan CNY= at 6.791. (Reporting by Kate Duguid and Tom Finn; Editing by Dan Grebler) ((kate.duguid@thomsonreuters.com; +646-223-6118; ReutersMessaging: kate.duguid@thomsonreuters.com@thomsonreuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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