FOREX-Euro hobbles near Nov lows as dollar takes comfort from Fed outlook, trade hopes

* Japanese yen close to six-month low vs dollar
* Swedish crown rises to four-month high vs euro
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Olga Cotaga
LONDON, Nov 29 (Reuters) - The euro hovered around its
lowest levels for this month on Friday as the dollar held its
poise on hopes that the United States and China would be able
defuse their damaging tariff war with a preliminary trade deal.
The U.S. currency also gained from data showing the world's
biggest economy is on a firm footing, which prompted investors
to scale back their rate-cut bets.
U.S. economic growth picked up slightly in the third
quarter, data showed on Wednesday, in contrast to other
indicators pointing to a slowdown in global activity.
The Federal Reserve also flagged an upbeat outlook amid
signs of labour market strength and a possible turnaround in
business investment. That prompted a pullback on rate cut bets for this year and
next, with the market now pricing in a 5% chance the Fed will
hike rates next month and most expecting it to hold steady.
FEDWATCH
Traders will be watching the release of the flash euro zone
inflation data at 1000 GMT. Economists polled by Reuters are
expecting the year-on-year harmonised index of consumer prices
to rise to 0.9% in November from 0.7% in October, which could
steer investors toward growth opportunities outside of the
United States too.
Still, "any euphoria related to this is likely to be
limited," said Thu Lan Nguyen, a currency analyst at
Commerzbank, noting that the rise is due to the change in the
calculation methodology.
Members of the European Central Bank are discussing the
potential for a new definition of the inflation target, which
now stands at below, but close to 2%.
The euro was last trading neutral at $1.1009 EUR=EBS ,
having climbed back from the two-week low of below $1.10 it
dropped to this week.
The dollar was flat against the safe-haven Japanese yen at
109.52 JPY=EBS , though very close to breaking another
six-month high.
The Chinese yuan -- the most sensitive currency to the trade
war -- was also flat and inside recent ranges, as most other
major currencies.
Nerves persisted within markets as traders navigated a
blizzard of trade war headlines that offered few clues as to
when or how a truce might be agreed between Washington and
Beijing.
China has vowed to impose "firm countermeasures" after U.S.
President Donald Trump's approval of a bill backing Hong Kong's
pro-democracy protesters on Wednesday, but is yet to indicate
whether they would have any bearing on trade talks. Negotiators between the world two biggest economies have
been trying for weeks to hammer out a 'phase 1" trade deal, with
markets hoping an agreement could be signed before year-end.
"There seems to be pretty good optimism around the trade
talks going on between U.S. and China," said William O'Loughlin,
a portfolio manager at Rivkin Securities in Sydney.
"Though as we know that can change on a dime...the rally
doesn't feel like a euphoric, super-bullish rally, it does feel
like climbing the wall of worry."
Elsewhere, the Swedish crown reached a four-month high
versus the euro of 10.51 EURSEK=D3 . After months of acute
weakness, the Swedish currency started to gain strength last
month.