* Trump says a deal with China could happen soon
* Dollar near its recent highs, enjoy safe haven demand
* New Zealand dollar rises on central bank comments
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, Sept 26 (Reuters) – The dollar edged lower but held close to its recent highs on Thursday as investors struggled to make sense of U.S. President Donald Trump’s mixed signals on a trade deal with China.
Foreign exchange markets were quiet at the European open, with currency pairs little moved but the dollar’s resilience this week was a sign of investor nervousness about the global outlook.
“We need new direction,” said Neil Mellor, a markets analyst at BNY Mellon, citing a pushback from central banks to markets expecting more monetary stimulus and confusion over whether the United States can strike a deal with China for the current range-bound moves in FX markets.
He said that he favoured the dollar as a safe haven currency in the short-term because of a difficult outlook for the global economy and trade negotiations, especially as central banks signal they “are not prepared to keep on shovelling out liquidity into the market”.
“There is a greater downside risk to risk assets,” he said.
The dollar index, which measures the greenback against a basket of currencies, was last down 0.1% at 98.985 but was only a whisker away from a two-week high and the two-year peak of 99.37 hit earlier this month.
Trump stoked hopes for a trade deal by telling reporters in New York that the United States and China were having “good conversations” and that an agreement “could happen sooner than you think”.
“It’s the Trump pump, and it works,” said Matt Simpson, senior market analyst at Gain Capital in Singapore.
“But there’s not really any major moves either, it’s a slight boost to risk,” he said, noting traders were also trying to assess the likely direction of a Trump impeachment probe opened by the Democrats on Wednesday.
That initially helped the Australian dollar claw higher, while the New Zealand dollar kicked ahead further after New Zealand’s central bank governor said it was unlikely he would need to use unconventional monetary policy.
But by 0730 GMT, the Aussie was up only slightly on the day at $0.6753, while the yuan was up 0.1% at 7.1241 per dollar in the offshore market.
The New Zealand dollar was last up 0.4% at $0.6297.
The euro rose 0.1% to $1.0947.
The Japanese yen, perceived as a safe haven currency, rose 0.1% to 107.68 yen per dollar.
Sterling steadied at $1.2354 after plunging more than 1% on Wednesday as traders fretted about the deepening confrontation in the British parliament over Brexit. (Additional reporting by Tom Westbrook in Singapore; Editing by Alison Williams)