FOREX-Dollar nurses losses; pound's fate tied to EU summit

* Dollar supported after overnight losses
* Pound on edge ahead of EU summit in Brussels
* Risk appetite cautious in absence of Sino-U.S. deal
details
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook
HONG KONG, Oct 17 (Reuters) - The dollar found support on
Thursday having weakened on lacklustre U.S. retail data, while
the volatile pound was on edge as Britain and the European Union
scrambled to secure a last-minute Brexit deal.
Sterling GBP= swung about a five-month high overnight,
knocked around by a series of mixed headlines on the likelihood
of progress at an EU leaders summit in Brussels later on
Thursday. It has surged some 5% since last week as negotiations
stepped up, and sat in early Asian hours at $1.2816 per pound.
The dollar was steady against most major currencies.
"I think we're all grateful that we might be coming to some
sort of an end to the recent saga," said Nick Twidale, director
of Sydney-based trade finance provider Xchainge.
"Anything that isn't a hard Brexit is going to be positive
for the sterling," he said, adding a deal or something close to
one could push the pound to $1.3500 or above.
Failure could drop it below $1.2200, Commonwealth Bank of
Australia analyst Richard Grace said in a note.
Against the euro EURGBP= the pound also stood just under a
five-month high at 0.8638 per euro.
The U.S. dollar had dropped on Wednesday as U.S. retail
sales fell for the first time in seven months, painting a gloomy
picture of the economy and making a case for rate cuts.
It was a touch weaker against the euro EUR= at $1.1074 and
the Japanese yen JPY= at 108.69, but slightly stronger against
the Australian and New Zealand dollars. Against a basket of
currencies .DXY the dollar hit a month low of 97.898 overnight
and was steady around that level on Thursday.
The Aussie AUD=D3 weakened a fraction to $0.6755 after a
senior Reserve Bank of Australia official said a national
property downturn had proven a larger-than-expected drag on the
economy. However traders are focused on employment data due at 0030
GMT for the next read on the health of the labour market and the
likely outlook for monetary policy.
"If the unemployment rate rises sooner than we expect ...
this increases the risk that the RBA cuts the cash rate in
November," said National Australia Bank's head of FX strategy,
Ray Attril, who anticipates unemployment keeping steady.
Lingering worries about trade tensions between the United
States and China have also kept investors' risk appetite in
check, weighing on the Aussie and other trade-exposed
currencies.
Reports of a partial trade deal between the world's two
largest economies last week initially cheered markets, but a
lack of details on the agreement has since curbed enthusiasm.
The New Zealand dollar NZD=D3 drifted lower, following
dovish comments from a top central banker on Wednesday, and sits
at $0.6290, not far from a four-year low hit two weeks ago.
China's yuan, which fell on Wednesday as new U.S.
legislation backing pro-democracy protests in Hong Kong
threatened to widen the rift between Beijing and Washington,
weakened a little further.
In offshore trade CNH= the yuan eased marginally to 7.1004
per dollar.