FOREX-Japan's yen gains, yuan down on trade woes, Hong Kong strife

* Prolonged U.S.-China trade war boosts safe-havens and yen
* ECB minutes set for release later in session
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Dhara Ranasinghe
LONDON, Nov 21 (Reuters) - The Japanese yen firmed against
the dollar on Thursday after sources close to the White House
told Reuters that a U.S.-China trade deal is unlikely this year,
shattering investor hopes of a partial agreement soon and
boosting safe-haven assets.
The Chinese yuan fell to a three-week low in onshore trade
on concern that a failure to reach a deal to roll back U.S.
tariffs could deal a fresh blow to China's stuttering economy.
Political tensions between Beijing and Washington also kept
investors on edge after a source told Reuters that U.S.
President Donald Trump is expected to sign into law two bills
intended to support anti-government protesters in Hong Kong.
Hong Kong has been rocked by months of increasingly violent
protest against Chinese rule of the former British colony. The
passage of a U.S. law supporting the protesters could undermine
efforts to secure a trade deal.
"The report from Reuters indicating that we might only see a
trade deal next year has been driving some of the yen strength
and that can also be seen as a source of some dollar strength,"
said Fritz Louw, a currency strategist at MUFG in London.
"If you see more negative trade headlines, and with the
potential signing in the U.S. of the HK human rights bill, the
yen should strengthen some more."
At 0825 GMT, the dollar was a tad weaker on the day at 108.54
yen JPY=EBS . Japan's currency has rallied almost 1% from more
than five-month lows hit against the greenback earlier this
month.
The dollar was little changed at $1.1077 versus the euro
EUR=EBS and a touch weaker against the British pound at
$1.2934 GBP=D3 .
Completion of a "phase one" U.S.-China trade deal could
slide into next year, trade experts and people close to the
White House told Reuters on Wednesday, as Beijing presses for
more extensive tariff rollbacks, and the Trump administration
counters with heightened demands of its own. The next date to watch is Dec. 15, when U.S. tariffs on some
$156 billion in Chinese goods are scheduled to take effect.
Analysts said that while trade war headlines have tended to
hurt the U.S. dollar in the past by boosting expectations for
interest rates cuts, the dollar was now likely to benefit from
any trade-related jitters in world markets given the Federal
Reserve is seen on pause.
Minutes released on Wednesday showed that the Fed, which hit
pause in its easing cycle following a rate cut in October, is
in no hurry to reassess the path of interest rates. The European Central Bank releases the minutes from its
October meeting later this session but this was not expected to
have a significant impact on the euro.
Elsewhere, China's yuan CNY=CFXS fell in the onshore
market to 7.0450 versus the dollar, the weakest since Nov. 1,
before steadying at 7.0372. Offshore, the yuan CNH=D3 slipped
to 7.0533 per dollar, the lowest since Nov. 5, and then pared
its losses.