* Dollar near two-week highs on Fed comments, safe-haven bid
* Euro trades below the 1.13 level
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Vatsal Srivastava
SINGAPORE, Nov 28 (Reuters) - The dollar held near two-week highs on Wednesday after a senior Federal Reserve official reaffirmed the need for further rate increases and as investors sought shelter in the currency thanks to simmering Sino-U.S. trade tensions.
The dollar has come under some pressure recently on signs the Fed might slow down the pace of its future rate increases amid cooling global growth and worries about world trade, investment and corporate earnings.
However, in comments on Tuesday Federal Reserve Vice Chair Richard Clarida backed further rate hikes though he said the tightening path would be data dependent. He said monitoring of economic data has become even more critical as the Fed edged ever closer to a neutral stance.
“Clarida comments certainly hinged towards hawkishness...we expect the Fed to remain consistent and adjust monetary policy according to incoming economic data which has so far been pretty robust,” said Stephen Innes, head of trading, APAC, at Oanda.
“We are expecting the Fed to raise rates in December and 3 times in 2019.”
Innes noted the dollar strength also reflected risks around the upcoming G20 summit in Buenos Aires between Nov. 30-Dec. 1 where U.S. President Donald Trump and his Chinese counterpart Xi Jinping are scheduled to meet and discuss contentious trade matters.
Trump’s comments this week in an interview with the Wall Street Journal that it was “highly unlikely” he would accept China’s request to hold off a planned increase in tariffs had scared riskier assets in a boost to safe-haven currencies including the dollar and the yen.
Attention will now turn to a speech by Fed Chairman Jerome Powell later on Wednesday and the minutes from the Fed’s Nov. 7-8 meeting on Thursday. Investors would be looking to further clues on how many more times the U.S. central bank is likely to hike rates in 2019.
Trump has repeatedly criticized the Fed and Powell on the U.S. central bank’s monetary policy stance, saying rising U.S. rates were harming the economy. nL2N1Y228T]
“Fed relishes independence and their approach is very mathematical and systematic. Under no circumstances do we expect the U.S. central bank to be pressured by Trump,” Innes said.
The dollar index, a gauge of its value versus six major peers, traded at 97.42 after rising for three sessions in a row. The index is sitting just below this year’s of 97.69.
The yen was largely unchanged at 113.75 on the dollar, but not far off a two-week low of 113.83.
The euro changed hands at $1.1295, gaining 0.07 percent versus the dollar. The single currency has lost 1.5 percent of its value in recent sessions due to signs of weakening eurozone economic momentum.
Elsewhere, sterling was down a touch at $1.2733. The pound is likely to remain under pressure as traders bet that British Prime Minister Theresa May would fail to get the nod for her Brexit agreement in a fractious parliament.
The Australian dollar, often considered a gauge for global risk appetite, traded flat at $0.7223. Analysts say the Aussie dollar remains vulnerable to further falls amid sharp losses in the price of iron ore, a key export earner for the country, and as U.S.-Sino trade tensions showed no signs of abating.
Reporting by Vatsal Srivastava Editing by Shri Navaratnam