FOREX-Dollar softens as Sino-U.S. trade deal optimism lifts Asian currencies

* U.S.-China deal seen reducing trade uncertainty
* Kiwi, Aussie drift higher, yen softens
* Elevated Swiss franc hints caution remains
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, Jan 16 (Reuters) - The dollar gave a little
ground to riskier Asian currencies on Thursday, as investors
hoped the Sino-U.S. trade deal could herald warmer relations
between the world's two biggest economies and help to revive
global growth.
Beijing and Washington touted the Phase 1 deal, signed
overnight at the White House, as a step forward. U.S. Vice President Mike Pence said further Phase 2
discussions had already begun as negotiators work to resolve
differences. That helped the trade-exposed Australian and New Zealand
dollars to book modest gains, while the safe-haven Japanese yen
softened slightly.
"We are living in a higher-tariff world in this year than
last year, but against that is the removal of uncertainty," said
Ray Attrill Head of FX Strategy, National Australia Bank.
"If you think that the trade situation is not going to be a
bigger drag than it was over the last couple of years, then
that's the glass half full interpretation of the outlook."
The beaten-up kiwi NZD=D3 led gains in major currencies,
rising 0.3% to $0.6635, while the Aussie AUD=D3 tacked on
0.1% to its highest for the week at $0.6919.
The Chinese yuan, the most sensitive currency to the
U.S.-China trade relationship, headed back toward a six-month
peak hit on Tuesday, adding 0.1% to 6.8860 per dollar in
offshore trade CNH= .
The greenback was also marginally lower against the euro
EUR= and pound GBP= , nursing overnight losses. Against a
basket of currencies .DXY the dollar sat at 97.195.
The centrepiece of the deal is a pledge by China to purchase
at least an additional $200 billion worth of U.S. farm products
and other goods and services over two years. The United States will also cut by half the tariff rate it
imposed on Sept. 1 on a $120 billion list of Chinese goods, to
7.5%.
Yet it addresses few of the issues that led to the trade
conflict in the first place, checking potentially more dramatic
market moves.
The safe-haven Swiss franc's overnight rally to a 15-month
high of 0.9680 per dollar - close to where it held in early
Asian trade - points to the level of caution.
The agreement does not fully eliminate tariffs. It is vague
on enforcement. It makes no real progress on host of thorny
problems from intellectual and many analysts are sceptical that
the purchase targets are realistic.
"I'm not sure that there's any hidden gold nugget," said
Westpac FX analyst Sean Callow.
"There's a sense of markets having traded off the positive
vibes of the trade agreement for long enough, and it's very hard
to see where the upside is from here," he said.
"If there is a step towards freer trade and lower tariffs,
then it's obviously not going to happen anytime soon."