FOREX-Trade optimism puts floor on dollar/yen, boosts Aussie

* USD/JPY stays not far from 6-mth peak, AUD hits 5-mth high
* U.S.-China trade optimism supports risk-on sentiment
* No big moves expected as holiday-thinned trade persists
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tomo Uetake
SYDNEY, Dec 27 (Reuters) - The dollar hovered near a
six-month high versus the Japanese yen while the Australian
dollar climbed to its strongest since July on Friday, buoyed by
easing Sino-U.S. trade tensions.
The optimism around prospects for a trade deal reduced
demand for safe-haven currencies such as the yen, but with
global currency markets in a holiday mood after Christmas Day on
Wednesday, overall trading activity was mostly subdued.
Beijing said on Wednesday it is in close touch with
Washington on a trade deal signing ceremony, a day after U.S.
President Donald Trump said he and Chinese President Xi Jinping
will have a ceremony to sign the recently struck agreement.
Overnight, the dollar rose to as high as 109.68 yen JPY=
against the safe-haven Japanese currency, a one-week high and
not far from 109.73 yen, its late May peak brushed earlier this
month. In Asian trade, the pair was last quoted at 109.47 yen.
"Although the overnight gains in the dollar were partly
erased by dipping Treasury yields after the seven-year note
auction, U.S.-China trade optimism has put a solid floor under
the dollar," said Toshinobu Chiba, chief portfolio manager for
fixed income at Nissay Asset Management.
"In any case, I don't expect any large moves either way in
markets today as trading remains subdued due to the holiday
week."
U.S. Treasury yields slipped on Thursday after the Treasury
Department sold $32 billion in seven-year notes to strong
demand. US/ The 10-year US10YR=RR last stood at 1.894%, its
lowest level in 1-1/2 weeks.
The trade-sensitive Aussie dollar AUD=D3 firmed to as high
as $0.6951 against its U.S. counterpart.
The euro was a shade higher at $1.1117 EUR= versus the
greenback.
The offshore yuan weakened slightly to 6.9958 yuan per
dollar CNH= .
Profits at China's industrial firms in November grew at the
fastest pace in eight months, breaking a three-month declining
streak, as production and sales quickened, but broad weakness in
domestic demand remains a risk for earnings next year.


(Editing by Jacqueline Wong)