* 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 steady after RBA holds rates
By Stanley White
TOKYO, Nov 5 (Reuters) - The U.S. dollar advanced 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 held steady after the Reserve Bank of
Australia (RBA) left monetary policy unchanged, as expected, and
said the main uncertainty continues to be the outlook for
consumer spending.
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 0.17% to 108.77 yen JPY=EBS in Asia,
adding to a 0.4% gain on Monday.
The U.S. currency rose 0.17% to 0.9895 Swiss Franc
CHF=EBS , following a 0.2% gain in the previous session.
The dollar index .DXY against a basket of six major
currencies rose 0.1% to 97.599, reaching 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. In the onshore market, the yuan CNY=CFXS was little
changed at 7.0276 versus the dollar.
Earlier on Tuesday the People's Bank of China cut the
interest rate on its medium-term lending facility for the first
time since early 2016 to prop up a slowing economy. 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 $0.6884
but was up 0.15% to 74.92 yen AUDJPY= .
Australia's central bank left its cash rate at a record low
of 0.75% on Tuesday and reiterated its concern about consumer
spending. It said rates are likely to remain low for an extended
period.
Many economists expect the RBA to cut rates at least once
early next year to help revive inflation and a slowing economy.