FOREX-Dollar gains on trade optimism, Aussie in focus ahead of RBA

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Dollar benefits from positive news about trade war
* Safe havens fall as sentiment swings to risk on
* Australian dollar on hold before RBA meeting

By Stanley White
TOKYO, Nov 5 (Reuters) - The U.S. dollar rose against the
yen on Tuesday thanks to growing optimism the United States and
China are on the verge of reaching a preliminary agreement to
scale back their bruising trade war.
The yen and the Swiss franc, two currencies that are often
bought as safe havens during times of economic or political
strife, nursed losses as investors became more comfortable
taking on risk.
The Australian dollar traded near its lowest in about a week
before a Reserve Bank of Australia (RBA) meeting later on
Tuesday. Monetary policy is likely to be kept steady, but an
accompanying statement may provide clues to how much further
rates could fall.
In recent days, Beijing and Washington have given
encouraging signs of progress in trade talks. The U.S.
government is considering dropping some tariffs on Chinese
goods, the Financial Times reported on Monday.
Bloomberg also reported that China is reviewing locations in
the United States where he could sign a so-called "Phase 1"
trade deal with U.S. President Donald Trump.
Both countries have slapped tariffs on each other's goods in
a trade war that has dragged on for 16 months and raised the
spectre of a global recession.
Any progress in resolving the row could potentially boost
the dollar and riskier assets, ease concern about the economic
outlook and reduce the need for aggressive monetary easing.
"The mood is very much risk on, so that's how investors will
approach the market," said Minori Uchida, head of global market
research at MUFG Bank in Tokyo.
"We're getting some positive news about trade talks. This is
all supportive of the dollar, and this trend could continue."
The dollar rose 0.12% to 108.70 yen JPY=EBS in early trade
in Asia, adding to a 0.4% gain on Monday.
The U.S. currency was a shade higher at 0.9886 Swiss Franc
CHF=EBS following a 0.2% gain in the previous session.
The dollar index .DXY against a basket of six major
currencies stood at 97.556, close to its highest in almost a
week.
In the offshore market, the yuan CNH=D3 edged slightly
higher to 7.0255 per dollar underpinned by hopes for a trade
deal.
Currency traders are also waiting for the U.S. ISM
non-manufacturing report due later on Tuesday, which is forecast
to show activity accelerated slightly in October.
The U.S. Federal Reserve has cut interest rates three times
this year, but recent data suggest the U.S. economic outlook is
not as bad as some had feared - another positive for the dollar.
The Australian dollar AUD=D3 was little changed at $0.6888
but was up 0.17% to 74.88 yen AUDJPY= .
Australia's central bank is expected to leave its cash rate
at a record low of 0.75% on Tuesday, with the RBA's statement
set to possibly signal how much further interest rates will
fall.
Many economists expect the RBA to cut rates at least once
early next year to help revive inflation and a slowing economy.