FOREX-Currency markets go risk-on as trade war, Brexit clouds lift

* Risk-on mood on reports of U.S.-China deal terms
* UK election result boosts sterling

(Recasts throughout, updates rates, adds comments post-U.S.
market open; new byline, changes dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Dec 13 (Reuters) - The dollar fell against a
basket of currencies on Friday as the prospect of a China-U.S.
trade deal and an election victory for Britain's Brexit-backing
Conservative Party appeared to clear the fog on the global
investment horizon, sapping safe-haven demand for the greenback.
Washington has set its terms for a trade deal with China,
offering to suspend some tariffs on Chinese goods and cut others
in exchange for Beijing's buying more American farm goods, U.S.
sources said on Thursday. Neither Washington nor Beijing have made official statements
about reports of the deal.
A deal could dial down tensions between the United States
and China, providing relief to investors who have been buffeted
for months by worries that a full-blown trade war would pressure
global economic growth.
The dollar index .DXY , which measures the greenback
against six major currencies, was down 0.45% to 96.956.
"Even the appearance of a resolution to this phase of the
trade war means a 'risk-on' environment," Marshall Gittler,
strategist at ACLS Global, said in a note.
Appetite for trade-sensitive risky currencies was capped,
however, by a lack of confirmation from Beijing whether it is on
board with Washington's proposal, although officials were to
hold a news briefing on Friday night local time to update
progress on the talks, the State Council Information Office
said.
In the hours since U.S. sources said terms for a phase-one
deal were in place, Beijing's silence had raised questions over
whether the two sides could agree on a truce in their trade war
before a new round of tit-for-tat tariffs takes effect on
Sunday.
"Only if it's actually signed and it's really official,
then the market will fully price it in," said Commerzbank FX
strategist Thu Lan Nguyen.
Against the Japanese yen, which tends to draw investors
during times of geopolitical or financial stress as Japan is the
world's biggest creditor nation, the dollar was about flat on
the day.
Although the offshore yuan was initially boosted on trade
deal hopes, it was last down about 0.7% versus the dollar.
CNH=
Meanwhile, the pound surged on Thursday as Prime Minister
Boris Johnson's Conservative Party won a resounding election
victory that markets believe makes an orderly British exit from
the European Union all but certain. Sterling reached a 19-month high versus the dollar and its
strongest levels against the euro since shortly after the 2016
Brexit referendum. The pound was last up 1.31% against the
dollar.

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