Wires

FOREX-Dollar supported by safety flows; euro at new 2-year low

Tom Westbrook

* Dollar finds broad safe-haven support

* Greenback near multi-week highs versus most major currencies

* Euro hits fresh two-year low

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

SINGAPORE, Sept 27 (Reuters) - The dollar stood tall on Friday, holding near multi-week highs against most major currencies as heightened risks from political tensions to the Sino-U.S. trade war increased its safe-haven lustre.

In Asian trade it was steady around 107.75 yen, near a one-week peak, and edged higher against the euro to $1.0916. The single currency slipped to a fresh two-year low pressured by an increasingly weak outlook for the euro zone.

The greenback also steadied against the Australian dollar, near its strongest in three weeks, while it regained some ground handed to the New Zealand dollar on Thursday.

"The positive U.S. dollar trend, with lots of noise in between it, remains intact," said Westpac analyst Imre Speizer in Auckland.

He added that risk aversion driven by trade war fears, a resilient U.S. economy and increasingly less-dovish-than-expected language from U.S. Federal Reserve board members were supporting the greenback.

"There's a bit of political risk thrown in there as well via the Middle East and Brexit," he said.

The pound wallowed at $1.2325, close to a two-week low hit on Thursday after the European Union's Brexit negotiator said Britain had yet to provide "legal and operational" proposals for an agreement on exiting the bloc.

Broader sentiment was fickle across markets. Positive comments from the Chinese commerce ministry on progress in trade negotiations had rallied European stocks overnight. 1/8nL3N26H297

Richmond Federal Reserve President Thomas I. Barkin said the U.S. economy looked strong and it was too early to tell whether further rate cuts were needed.

But a Bloomberg report that said the United States was unlikely to extend a waiver over Huawei Technologies' blacklist weighed on U.S. equities.

Markets are also digesting the impeachment probe launched into U.S. President Donald Trump, who went on the offensive as investors increasingly view the inquiry as a long-term drag rather than a short-term risk.

The opening of the probe on Wednesday had initially knocked the dollar, but it soon recovered and surged.

The dollar index, which measures the greenback against a basket of other currencies, rose overnight to its highest since Sept. 3 and held near that mark on Friday at 99.215.

"It seems that when push comes to shove, the USD remains the safest place to be at the moment," said Rodrigo Catril, senior FX analyst at National Australia Bank in Sydney.

"In addition to its prime reserve currency status, the greenback is still benefiting from a yield supremacy and a U.S. economy that is still performing relatively well."

Elsewhere, the Australian dollar was firmer at $0.6754, but only marginally as traders wait for a central bank meeting next Tuesday where the Reserve Bank of Australia is widely expected to cut interest rates.

The New Zealand dollar surrendered some of its gains won on Thursday, when Reserve Bank of New Zealand Governor Adrian Orr was circumspect about the prospect of further monetary easing to steady at $0.6295.

The Chinese yuan eased in offshore trade to 7.1300 per dollar. (Editing by Jacqueline Wong)