FOREX-Euro dips as festive mood thins trading volumes

* Dollar ekes out small gain, helped by trade detente
* Aussie nears five-month high, Kiwi close behind
* Sterling back under pressure near $1.29
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds new quote, details on yuan, latest prices)
LONDON, Dec 24 (Reuters) - The euro slipped on Tuesday,
heading back towards a two-week low, as optimism about improved
U.S.-China trade relations supported the dollar, although
currency markets were quiet at the start of the holiday season.
Sterling, which has fallen for five straight days, was under
pressure again versus the dollar as worries about a disruptive
Brexit and reduced liquidity combined to hurt the currency.
The euro was last down 0.2% at $1.1071 EUR=EBS . The
dollar, measured against a basket of currencies, rose 0.1%, with
the index at 97.781 .DXY .
Australia's dollar approached five-month highs. The Aussie
tends to do well when optimism grows over global trade and
China's economy. The United States and China have announced
phase one of a trade deal, and markets see the agreement as a
de-escalation in their long-running dispute.
The Australian dollar rose to as much as $0.6930 AUD=D3 ,
within striking distance of its Dec. 13 peak of $0.6939, its
highest level since late July. The currency has gained more than
1% since last week.
Analysts say that uncertainties around the Washington and
Beijing trade dispute will extend into 2020.
"The trade story is far from over, so Mr Trump can continue
the battle next year, and as long as it doesn't impact US
growth, it should play well with voters," said David Madden, an
analyst at CMC Markets.
The New Zealand dollar NZD=D3 traded lower at $0.6632,
just below a five-month high of $0.6639 hit on Monday.
China's yuan was unmoved after Premier Li Keqiang said the
government was considering more measures to lower corporate
financing costs and hinted at "targeted" cuts in banks' reserve
requirement ratio. The offshore yuan last traded at
7.007 CNH=EBS .
Sterling weakened to $1.2938 GBP=D3 after reaching a
three-week low of $1.2905 on Monday. It has fallen since Prime
Minister Boris Johnson ruled out extending the transition
period before Britain leaves the European Union beyond December
2020. Many worry that leaves too little time to negotiate a new
trade deal with the EU.
"We expect investor concern about cliff-edge Brexit risk to
diminish, as political incentives do not support the risk of
economic disruption," said Steve Englander, head of global G10
FX research at Standard Chartered bank.
"That said, there is no reason to expect political
brinkmanship to diminish; this is likely to be reflected in high
volatility. We see the GBP becoming stronger, but on a jagged
path."
Against the euro, sterling recovered 0.2% to 85.59 pence
EURGBP=D3 .
Against the Japanese yen the dollar was unchanged at 109.40
JPY=EBS .