* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Sept 17 (Reuters) - The dollar gave up early gains and fell on Monday while emerging market currencies slipped nearly half a percent as investors waited for the next salvo in the trade war between the United States and China.
U.S. President Donald Trump is likely to announce new tariffs on about $200 billion of Chinese imports as early as Monday, a senior official told Reuters. The tariffs will probably be about 10 percent, less than the 25 percent the administration had considered.
The news pushed the dollar index up nearly half a percent on Friday to 95, its biggest daily rise since Aug. 23.
It briefly held on to those gains in early Monday trading before shedding nearly a quarter of a percent to 94.75.
“Trade wars continue to dominate investors’ minds and markets are wary of taking big positions, but overall there is little going on in currency markets,” said Manuel Oliveri, a currency strategist at Credit Agricole in London.
A widely read Chinese newspaper said China would not be content only to play defence in an escalating trade war with the United States. Both countries have already levied duties on $50 billion worth of each other’s goods.
The dollar has benefited from safe-haven flows as the trade conflict has worsened. Strong U.S. data also helped, but some market watchers believe those flows may be ending after tepid U.S. inflation data last week.
Positioning is starting to reflect that. Speculators began unwinding some of their short bets against the euro and sterling last week. Encouraging developments in Brexit negotiations helped as well.
Net long positions fell to $19.2 billion, the lowest since mid-July, according to calculations by Reuters and Commodity Futures Trading Commission (CFTC) data released on Friday.
Emerging markets remained under pressure with an index tracking them down by nearly half a percent on Monday, not far above a 15-month low hit last week.
Reduced risk appetite was also visible in European currencies with the euro/Swiss franc cross down by 0.1 percent.
Notwithstanding recent positive headlines around Brexit negotiations, the cross has declined nearly 2 percent so far this month, suggesting investors have been reducing risky positions.
The dollar traded higher against the yuan despite a lower daily fix by the Chinese central bank. The dollar was last at 6.87 yuan after closing on Friday at 6.86.
The euro rose 0.2 percent to $1.1654, down from a three-week peak of $1.1721 set on Friday. The pound rose a similar amount to $1.3104, not far off last week’s peak of near $1.32.
The first of three Brexit summits is set for the coming week. European Union leaders hope to reach an agreement within the next two months over the terms of Britain’s departure .
Reporting by Saikat Chatterjee; Editing by Kevin Liffey