FOREX-Yen sags as prospects for U.S.-China trade deal looking good

* Dollar/yen rises near 6-month high; Aussie, kiwi supported
* China says in talks with Washington over deal ceremony
* Dollar/yuan falls below 7
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Hideyuki Sano
TOKYO, Dec 26 (Reuters) - The dollar edged up slightly
against the yen while risk-sensitive currencies held firm on
Thursday, buoyed by optimism of easing trade tensions between
the United States and China and signs of recovering global
growth.
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 that he and Chinese President Xi
Jinping will have a ceremony to sign the recently struck trade
deal.
"There have been some doubts over whether they can really
sign a deal. But this week China has announced cuts in its
tariffs while Trump also talked about a ceremony for the deal.
So it feels more likely that the deal will come through," said
Ei Kaku, currency strategist at Nomura Securities.
Against the yen, the dollar rose 0.2% to 109.54 yen JPY=
and within striking distance of a six-month high of 109.73
touched earlier this month. The euro barely moved at $1.10905
EUR= .
The Australian dollar held firm at $0.6927 AUD=D4 , a shade
below its four-month peak of $0.6939 touched earlier this month
while the kiwi traded at $0.6648 NZD=D4 , near its highest
level in five months.
Global currency markets remained in holiday mood following
Christmas Day on Wednesday and with several centres still closed
on Thursday.
However, traders have taken a positive lead after Washington
and Beijing struck an interim agreement on trade earlier this
month, which is expected to continue to underpin risk assets.
Surveys on manufacturing activity in many countries have
also shown signs of a bottoming out in recent months.
In currency markets, stronger risk appetite usually
translates to more selling in safe-haven currencies, such as the
yen, against currencies leveraged more to growth, particularly
that in China, such as the Australian dollar.
"While global share prices have been rallying, the currency
market has seen limited reaction so far but I think currencies
will have a catch-up to do," said Koichi Kobayashi, chief
manager of forex at Mitsubishi UFJ Trust Bank.
The offshore yuan strengthened slightly to 6.9905 yuan per
dollar CNH= .
"I think it could reach the 6.8 handle when the deal is
officially signed," said Nomura's Kaku.
Also mildly supporting risk sentiment, a report by
Mastercard Inc MA.N showed on Wednesday that U.S. holiday
sales rose a brisk 3.4%, though it was short of a 5.1% increase
last year. Elsewhere, sterling traded at $1.2986 GBP=D4 , up a bit
from levels before the Christmas holidays though still way below
its Dec. 13 peak of $1.3516.