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FOREX-Dollar gains as trade tensions fuel demand; Fed minutes due

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

By Elizabeth Howcroft

LONDON, Nov 20 (Reuters) - The dollar edged higher on Wednesday as worsening U.S.-China relations fuelled demand for the greenback before the release of minutes from the Federal Reserve's October policy meeting where it raised interest rates for the third time this year.

In a familiar risk-off move, trade-exposed currencies weakened and the Japanese yen, which is perceived as a safe-haven, gained after U.S. President Donald Trump threatened a trade war escalation.

In a further sign of geopolitical unrest, China condemned the U.S. Senate measure backing pro-democracy protesters in Hong Kong, saying that the United States should stop interfering.

"Today the main focus is the trade talks between China and the U.S. and we are seeing risk aversion," said Piotr Matys, currency strategist at Rabobank.

Matys said the Senate's bill in support of Hong Kong could complicate progress towards a preliminary trade deal.

After falling more than 0.5% from a one-month high of 98.44 last week, the greenback rose 0.2% against a basket of currencies.

Trade-exposed currencies took a hit, with the Australian dollar down as much as 0.4% versus the U.S. dollar.

After initial gains in early London trading, demand for safe-have currencies eased with the Japanese yen up 0.1% against the dollar and the Swiss franc broadly flat against the euro.

"These are miserably tight ranges - this is risk-on, risk-off," said Kit Juckes, head of FX Strategy at Société Générale, referring to the day's moves.

Minutes from the U.S. Federal reserve's FOMC meeting in October are due at 1900 GMT. Analysts expect little impact as the Fed made it clear in October that they were not going to cut interest rates any more this year.

"They were trying to engineer something that looked vaguely like a hawkish cut and that ought ot be reflected in (the minutes)," Juckes said.

He said that a rate cut was not expected before the first quarter of 2020.

Juckes added that the minutes may give more indication of splits within the policymaking committee.

In recent months the dollar has been trading at highs not seen since 2017. It has appreciated 10% from its February 2018 low-point and is now closer to its early 2017 peak, which was a 14-year high.

"The U.S. economy is in a late cycle and we think the dollar will face significant headwinds next year," said Timothy Graf, head of macro strategy EMEA at State Street Global Markets.

"While the catalyst for protracted dollar weakness could be a variety of factors including the outcome of the 2020 elections or an inflationary spike, the dollar looks over-valued on multiple factors."

Juckes also said that the dollar was over-valued, but said that this is always true of the American currency.

(Reporting by Elizabeth Howcroft Editing by Peter Graff and Alison Williams)