REFILE-FOREX-Yen, franc sink as fading risks take shine off safe-havens

(Corrects day of the week in lede)
* Positive mood drives traders from safe havens
* Mnuchin touts trade progress, Germany reportedly mulls
stimulus
* Yen, franc, gold and silver sold

By Tom Westbrook
SINGAPORE, Sept 10 (Reuters) - The yen and swiss franc fell
to five-week troughs on Tuesday as investors looked for
higher-risk currencies, emboldened by a report of German
stimulus plans, diminishing chances of a no-deal Brexit and
hopes of a trade war breakthrough.
Silver XAG= and gold XAU= were also sold in the slide
that pushed the yen JPY=EBS as low as 107.49 per dollar, and
the franc CHF= to $0.9922, with both also losing ground to the
euro.
"Over the past 24 hours there has been a move towards more
risk-friendly, pro-growth currencies," Rodrigo Catril, senior FX
strategist at National Australia Bank in Sydney.
"But it is kind of a lull period following a whole stream of
positive news last week. We're in a wait-and-see mode with major
risk events like Brexit and trade negotiations being kicked down
the road."
The pound GBP=D3 stood just under a six-week high of
$1.2385, hit overnight after a British law blocking a no-deal
exit from the European Union came into force. The South Korean won KRW= and New Zealand dollar NZD=
drifted higher, the won holding close to a month high at 1,191.0
per dollar and the kiwi close to a three-week peak at $0.6434.
Exuberance was held back, however, by weak Chinese economic
data that hit equities markets, with factory-gate prices
shrinking at their fastest pace since August. Ratings house Fitch on Tuesday cut growth forecasts for
Europe and China citing rising protectionism. The yuan CNY=CFXS held mostly flat around 7.1169 per
dollar.
Traders also remained cautious ahead of a key European
Central Bank meeting on Thursday, at which policymakers are
expected to ease monetary policy. The euro EUR=EBS was flat at $1.1043, underneath an
overnight high of $1.1067 hit following a Reuters report that
Germany may set up public investment agencies to boost fiscal
stimulus without breaching national spending rules. "This news caused some people to revise down their
expectations for Thursday's ECB meeting, although I think that's
entirely premature," said Marshall Gittler, chief strategist at
ACLS Global, in a note.
"I think the small rally in EUR today just sets up the
currency for a bigger fall on Thursday."
Market hopes for a trade breakthrough, meanwhile, rested on
confidence overnight from U.S. Treasury Secretary Steven
Mnuchin. He told Fox television that there had been "a lot of
progress" on a U.S-China trade deal and that the U.S. side was
"prepared to negotiate". The remarks pushed U.S. benchmark 10-year Treasuries
US10YT=RR to a three-week high where they held in Asian trade.
The dollar was flat against a basket of currencies .DXY at
98.359.
Sterling barely shifted when Britain's parliament voted, as
expected, to stymie Prime Minister Boris Johnson's bid for an
early election, which prompted him to vow that he would secure a
Brexit deal at an EU summit next month.
"While I am loath to go anywhere near the pound, I like what
I see in the price action," said Chris Weston, head of research
at Melbourne forex brokerage Pepperstone Group.
"If GBP/USD kicks up through $1.2354 again, I would be
looking for longs, with a stop through $1.2234."