FOREX-Sino-U.S. trade thaw sparks risk rally, euro awaits ECB

* Risk currencies rally after Trump postpones tariffs
* Dollar at six-week peak vs yen, yuan jumps
* Euro slides ahead of ECB meeting

By Tom Westbrook
SINGAPORE, Sept 12 (Reuters) - An exchange of olive branches
between Washington and Beijing on trade pushed the dollar to a
six-week high against the safe-haven yen on Thursday and also
supported the risk-sensitive currencies of China, Australia and
South Korea.
The world's two largest economies granted concessions in
their heated tariff dispute on Wednesday ahead of planned talks.
China exempted a basket of U.S. goods from its own tariffs while
U.S. President Donald Trump said he would delay a scheduled
tariff hike by two-weeks in October.
The thaw in hostilities supported broader risk appetite in
global financial markets with the Chinese yuan CNH= jumping
0.2% to 7.0861 in offshore trade, its highest in three weeks.
The trade-exposed Korean won KRW= hit a six-week peak of
1,185.67 per dollar. The Australian dollar AUD=D3 rose 0.2%.
The yen JPY=EBS fell almost 0.2% to 108.00 per dollar, its
weakest since Aug. 1.
"It's a conciliatory move," said Joe Capurso, senior
currency strategist at the Commonwealth Bank of Australia in
Sydney, while warning not to get too carried away.
"It's not really a change in policy...we don't see any
strong evidence there's going to be a permanent agreement to
ratchet down these tariffs."
The other major driver for currency markets on Thursday is a
meeting of the European Central Bank, where expectations of
easing have weakened the euro.
The single currency EUR=EBS has shed 3.5% since June and
fell to a one-week low of $1.0983 overnight. It was steady at
$1.1010 in Asian morning trade.
With growth slowing, the ECB has all but promised more
support for the economy in one of the most closely watched
meetings in years. The ECB is almost certain to cut rates, promise to keep
rates low for longer and provide banks relief from the side
effects of negative rates. However, new asset purchases, priced
in by markets, are not a done deal with some conservative
policymakers opposing the move.
"Market reaction will likely hinge on the confirmation of a
rate cut," said David de Garis, a director of economics and
markets at National Australia Bank in London.
"The real kicker though will not be whether QE is
re-started, but crucially, whether it leaves markets feeling the
ECB is running out of room, or hamstrung by internal
opposition," he said. "What markets would not want to hear is
during the press conference evidence of a disagreement."
Sterling also dipped after a Scottish court ruled on
Wednesday that Prime Minister Boris Johnson's suspension of the
British Parliament was unlawful, prompting immediate calls for
lawmakers to return to work as the government and Parliament
battle over the future of Brexit. The British pound GBP=D3 fell as much as 0.4% to $1.2313
overnight, and hovered around $1.2330 in Asian hours.