FOREX-Dollar hovers near 3-1/2-week high amid cautious optimism on tariff rollbacks

* Dollar holds ground won last week
* Yen, yuan ease on Hong Kong violence, weak China data
* Investor focus on U.S.-China trade deal
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook and Tomo Uetake
SINGAPORE/TOKYO, Nov 11 (Reuters) - The dollar held near
multi-week highs on Monday amid optimism that the United States
and China would roll back tariffs that have hurt global growth.
The dollar index .DXY against a basket of six major
currencies stood flat at 98.323, just off its 3-1/2-week high of
98.404 touched on late Friday.
Moves were slight as traders kept a wary eye for further
news on the U.S.-China trade war.
Officials from both countries said late last week that a
rollback of some tit-for-tat tariffs had been agreed as part of
a preliminary deal, that has still to be finalised, aimed at
ending the trade war. Even though that was subsequently denied by U.S. President
Donald Trump on Friday, he did not completely rule out a deal
and U.S. benchmark treasuries held above a key support level at
1.9%, buoying the currency. US/N
"He (Trump) has left the door open to some (tariff)
rollbacks," said Rodrigo Catril, a senior FX strategist at
National Australia Bank in Sydney.
"The market has latched on to the idea that there's
definitely the prospect that some will be done," he said.
"Everyone is looking to price in the improvement in the
global growth outlook," he added, pointing out that future
improvement was further supported by an altogether positive
earnings season from U.S. companies.
Against the euro, the greenback was little moved at $1.1023,
reflecting some investor caution that the deal could still
unwind.
Versus the Japanese currency, the dollar slipped 0.25% to
109.03 yen JPY= as some safe-haven buying kicked in on reports
that Hong Kong police opened fire and hit at least one
protester, a fresh escalation of violence as anti-government
demonstrations enter their sixth month. But the yen still stood not too far from 109.49 yen, its
five month-high marked on Thursday.
The Chinese yuan weakened 0.19% at 7.0013 per dollar in
offshore trade CNH=D4 on fresh violence in Hong Kong, where
police fired live rounds at protestors, with Cable TV and other
media reporting at least one person being wounded.
Disappointing economic data also hurt sentiment toward the
yuan, as China's producer prices fell the most in more than
three years in October, National Bureau of Statistics (NBS) data
showed on Saturday, while the country's consumer prices rose at
their fastest pace in almost eight years. "Trump has claimed China wanted a deal more than he did.
Looking at recent Chinese data, I think he was telling the
truth," said a forex trader in Tokyo.
Prior to market opening, the People's Bank of China set the
midpoint rate CNY=PBOC at a fresh three-month high of 6.9933
per dollar, 12 pips firmer than Friday's fix of 6.9945.
The yuan's decline on Monday followed five straight weeks of
gains, the longest winning streak in nearly nine month,
supported by rising hopes that the world's two largest economies
could strike a deal to de-escalate their trade tension.
With the United States on holiday for Veterans Day, focus is
likely to be on news headlines, British economic data due later
on Monday and a rate-setting meeting of the New Zealand central
bank later in the week.
Britain's economy has lost momentum this year, hurt by a
global downturn due to the U.S.-China trade war as well as
increased uncertainty over its exit from the European Union. It
is forecast to have grown 0.4% for the quarter.
The British pound GBP= , whose fate is now closely tied to
the outcome of an election set for Dec. 12, edged a shade higher
to $1.2792 in Asian trade.
"The latest poll of polls show the Conservative party's lead
is widening," Commonwealth Bank of Australia analyst Jos Capurso
said in a note. "If this trend continues, GBP will edge higher
in the near term."