By Saqib Iqbal Ahmed
NEW YORK (Reuters) - The U.S. dollar rose to a one-week high against the safe-haven Japanese yen on Wednesday on revived hopes for an amicable resolution to the U.S.-Chinese trade war, after a report that China is still open to agreeing to a partial trade deal with the United States.
The report, from Bloomberg, cited an official with direct knowledge of the trade talks.
It comes a day after trade tensions flared again after the U.S. State Department said it has imposed visa restrictions on Chinese government and Communist Party officials it believes responsible for the detention or abuse of Muslim minorities in Xinjiang province.
Separately, the Financial Times newspaper reported that Chinese officials are offering to increase annual purchases of U.S. agricultural products as the two countries seek to resolve their trade dispute.
Vice Premier Liu He, China's top trade negotiator, is scheduled to travel to Washington for their next round of trade talks on Thursday and Friday.
"Risk appetite is definitely alive and well," said Alfonso Esparza, senior currency analyst at OANDA in Toronto.
Against the yen, which tends to strengthen during times of geopolitical stress due to Japan's standing as the world's biggest creditor, the greenback was 0.43% higher at 107.53 yen.
The greenback climbed 0.3% against the Swiss franc, another currency investors deem a safe haven.
Still, some analysts advocated caution on the latest bout of optimism around the U.S.-China trade talks.
"The Trump administration’s decision to impose visa bans on Chinese officials linked to abuses, blacklist some Chinese high tech companies and a ban on U.S. pension funds investing in China hardly make for a positive backdrop to the trade talks, especially considering that China has yet to respond to the U.S. moves," said Shaun Osborne, chief market strategist at Scotiabank in Toronto.
The dollar index <.DXY>, which measures the greenback against a basket of other currencies, was about flat on the day.
Most Federal Reserve policymakers supported the need for an interest rate cut in September, minutes of the central bank's last policy meeting showed, but they remain increasingly divided on the path ahead for monetary policy.
"It was very neutral. You can still see the divide between the hawks and the doves," Esparza said.
"They are in somewhat agreement that the U.S. economy is growing. It's just what comes next, where the two differ," he said.
Meanwhile, sterling erased earlier gains on Wednesday after the Northern Irish party that supports the British government said it would emphatically oppose a reported European Union concession on the Irish backstop under any Brexit deal.
The pound was 0.05% lower against the dollar at $1.2211, after rising as high as $1.229.
(Reporting by Saqib Iqbal Ahmed in New York; Editing by Steve Orlofsky and Matthew Lewis)