FOREX-Currencies in cautious mood as investors wait for trade deal signing

* Markets on edge before signing of trade deal
* Yen inches higher, yuan drifts lower
* UK inflation data in focus for pound

By Tom Westbrook
SINGAPORE, Jan 15 (Reuters) - The safe-haven yen held firm
and riskier Asian currencies softened a little on Wednesday, as
currency investors awaited the signing of the U.S.-China trade
deal with trepidation.
The formal agreement is aimed at drawing a line under 18
months of tit-for-tat tariff hikes that have hurt global growth,
but it will not end the trade dispute between the world's two
largest economy.
U.S. Treasury Secretary Steven Mnuchin said existing tariffs
on Chinese goods would stay, pending further talks. That pulled China's yuan below Tuesday's six-month peak and
lifted the Japanese yen from a seven-month low, as traders
reckoned on few further benefits from the agreement.
"The deal is priced in," said National Australia Bank's head
of FX strategy, Ray Attrill. "I can't see any reason why the
yuan should continue to strengthen, given the limited amount of
tariff rollbacks that are contained in this deal."
The yuan is the currency most sensitive to Sino-U.S. trade
relations, and it retreated 0.2% to 6.8942 CNY= .
The yen JPY= was nearly 0.1% firmer at 109.88. The euro
EUR= was steady at $1.1132 and the Swiss franc CHF= held on
to overnight gains to sit at 0.9672 per dollar.
The trade-exposed Australian and New Zealand dollars each
eased, with the Aussie AUD=D3 last 0.1% lower at $0.6898 and
the kiwi NZD=D3 a fraction weaker at $0.6612. Against a basket
of currencies the U.S. dollar held at 97.339 .DXY .
U.S. President Donald Trump is slated to sign the Phase 1
trade agreement with Chinese Vice Premier Liu He at the White
House at 1630 GMT.
Washington has already agreed to suspend tariffs on $160
billion of some Chinese-made electronics, and to halve existing
tariffs on $120 billion of other goods to 7.5%.
But it will leave in place 25% tariffs on a vast, $250
billion array of Chinese industrial goods and components used by
U.S. manufacturers.
A source told Reuters that China has pledged to buy almost
$80 billion of additional manufactured goods from the United
States over the next two years under the deal, although some
U.S. trade experts called that unrealistic.
Mnuchin said deal documents will be released on Wednesday,
except for confidential annex covering the product and services
purchases.
Elsewhere the British pound GBP= was marginally stronger
at $1.3027, ahead of inflation data due at 0930 GMT.
The consensus expectation is for the core annual inflation
rateto hold steady at 1.7%. However, several recent hints at
rate cuts from Bank of England policymakers have investors on
edge that a miss on the downside may strengthen the case for
monetary easing.
Money markets are now pricing in a 43% chance for a 25 basis
point cut in rates at the end of this month. BOEWATCH
"If we saw core inflation coming in at say, 1.4%, then I
think that would inflame the situation," said Chris Weston, head
of research at Melbourne brokerage Pepperstone.
He added that business surveys next week would be even more
closely watched. "If they don't show any kind of meaningful
rebound, then you're probably going to get a market that's
pricing in (the chance of a cut) at north of 50%."