FOREX-Dollar, pound tread water; Aussie bolstered by jobs report

* Dollar nurses overnight losses, risk appetite cautious
* Pound on edge ahead of EU summit in Brussels
* Aussie jumps after joblessness rate drops
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook
HONG KONG, Oct 17 (Reuters) - The dollar drifted lower on
Thursday after lacklustre U.S. retail data and gathering doubts
about a Sino-U.S. trade deal, while the volatile pound was on
edge as Britain and the European Union scrambled to secure a
last-minute Brexit deal.
As the greenback gave ground to major currencies, the
biggest gainer was the Australian dollar AUD=D3 , which jumped
0.4% from the session's low after jobs data showed buoyant
hiring, lowering chances of monetary easing in November.
Sterling GBP= edged higher to $1.2828 after swinging 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.
"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.
The U.S. dollar, meanwhile, had dropped on Wednesday as U.S.
retail sales fell for the first time in seven months, painting a
gloomy picture of the economy. It drifted 0.1% weaker against the euro EUR= to $1.1083
and was steady against the Japanese yen JPY= at 108.76.
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 jumped to $0.6786 after figures showed
joblessness unexpectedly contracting a bit last month, taking
some pressure off the central bank to further reduce interest
rates in November.
"This is just what the doctor ordered," said CBA Chief
Economist Craig James.
"There is no reason for the Reserve Bank to cut rates again
in November – giving the central bank more time to gauge the
effectiveness of early rate reductions."
Lingering worries about trade tensions between the United
States and China kept a lid on gains for 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.
"Even if a deal is signed, it remains uncertain if the
obligations can be fully met on both sides," strategists at
Singapore's DBS Bank said in a note.
The New Zealand dollar NZD=D3 was lower, following dovish
comments from a top central banker on Wednesday, and sits at
$0.6287, not far from a four-year low hit two weeks ago.
China's yuan CNY= weakened slightly to 7.0975 per dollar.