FOREX-Dollar underpinned by trade optimism; loonie lifts as Canada votes

* Trade optimism bolsters dollar and riskier currencies
* Canadian dollar rises as votes tallied in close election
* Pound waits for Brexit developments
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook
HONG KONG, Oct 22 (Reuters) - Signs that the U.S. and China
were making progress in efforts to resolve their trade dispute
supported both the dollar and trade-exposed Asian currencies on
Tuesday, while the Canadian dollar rose as voters went to the
polls in a closely-fought election.
The volatile pound GBP= sat just under a 5-1/2-month high
at $1.2962, with the Brexit project in disarray but traders
looking to another crucial parliamentary vote on Tuesday to
determine the next step. U.S. President Donald Trump said in Washington that work
toward ending the U.S.-China dispute was going well, while White
House adviser Larry Kudlow said tariffs scheduled for December
could be withdrawn if progress is made. Meanwhile Commerce Secretary Wilbur Ross said that while a
deal may not be finalised next month, that was less important
than securing "the right deal," following Chinese Vice Premier
and chief negotiator Liu He saying last week that Beijing is
approaching talks from a basis of mutual respect.
"A concerted effort from both countries to manage market
expectations of a longer negotiation was well accepted," said
Michael McCarthy, chief market strategist at brokerage CMC
Markets in Sydney.
"It is now clear to investors that a comprehensive trade
agreement will require many months of discussion."
The dollar was steady against most major currencies in early
Asian trade, holding only a fraction below a three-month high
against the Japanese yen JPY= at 108.58 yen per dollar.
It lifted from a two-month low touched against the euro
EUR= overnight to steady at $1.1148, and was flat against a
basket of currencies .DXY at 97.304.
The Canadian dollar - the best performing G10 currency this
year - climbed to a three-month high of 1.3082 per dollar
overnight as voters turned out in an election expected to be too
close to call.
It held near that level as the first polls closed, with
Prime Minister Justin Trudeau seeking to cling to power against
a strong challenge from opposition Conservatives. The trade exposed Australian and New Zealand dollars drifted
higher, though remained marginally below one-month peaks that
both currencies touched overnight. The Aussie AUD=D3 last
traded at $0.6867 and the kiwi NZD=D3 at $0.6409.
The pound held steady at $1.2969, with Brexit developments
set to determine its fate.
With just over a week before Britain is due to leave the
European Union, Boris Johnson's push to re-run a parliamentary
vote he lost on the weekend was rejected.
But he has resolved to press on with seeking to pass
Brexit-related laws in parliament on Tuesday, with their
progress to determine the timeline.
"While markets haven't seen fit to reverse last week's
optimism that saw sterling smartly higher they aren't yet
prepared to take the pound up to the next level," said National
Australia Bank Head of FX Strategy Ray Attrill.