FOREX-Aussie, Kiwi shine as risk appetite returns; dollar firm

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, Jan 10 (Reuters) - The Australian dollar and its New
Zealand counterpart led gains among major currencies on Friday
as easing geopolitical tensions prompted investors to buy
riskier currencies with relatively upbeat U.S. economic data
this week also benefiting sentiment.
The greenback held firm against a broad basket of its rivals
and is on track to post its best week in two months as the
prospect of war in the Middle East ebbed as the United States
and Iran backed away from further confrontation.
"Risk sentiment is back on thanks to easing geopolitical
tensions and hopes of an interim trade deal between China and
the U.S. as early as next week," said Manuel Oliveri, a currency
strategist at Credit Agricole in London.
The Aussie AUD=D3 gained a third of a percent to $0.68755
though strength were curbed on rising bets of an interest rate
cut as early as February due to weeks of bushfires that have
cast a shadow over the broader economy. AUD/
The Kiwi dollar NZD=D3 also edged up 0.2% to $0.6622.
On a weekly basis, though, the greenback has broadly
outperformed in the G10 FX space thanks to strong data this
week, with data showing a pick-up in the U.S. service sector,
falling joblessness claims and solid private hiring.
The data has also put a floor under a recent shrinking of
interest rate differentials between U.S. and European bonds,
with spreads between U.S. Treasuries and equivalent German debt
for 10-year maturities trading near 210 bps. US10DE10YT=RR
"There's nothing fundamental to drive people out of the U.S.
dollar at this stage," said National Australia Bank's head of FX
strategy, Ray Attrill.
Against a basket of its rivals .DXY , the greenback gained
0.6%, its biggest weekly rise since early November. It held firm
at 97.44 on Friday.
Moves in other major currencies were modest on Friday, with
traders focused on December job-market data due at 1330 GMT. The
consensus forecast is for 164,000 extra jobs in December,
following a bumper 266,000 added in November.
Another strong performer this week has been the Chinese
yuan, which has climbed to a five-month high, despite the
geopolitical turbulence, on growing optimism as the Jan. 15 date
for signing the Sino-U.S. trade deal nears.
It last traded at 6.9315 per dollar CNY=.
U.S. President Donald Trump, who announced last month that
the Phase 1 trade deal with China would be signed on Jan. 15,
said on Thursday the agreement could be signed "shortly
thereafter".