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FOREX-Dollar slides to 3-month low on hopes of Brexit, U.S.-China trade deals
Published at 11/10/2019 at 15:42

* Euro up vs dollar as risk appetite returns

* Sterling rises to 3-month high vs dollar

* Safe-haven yen drops to 2-1/2-month low vs dollar

* EU, Britain to hold intense negotiations on Brexit deal

* China drums up hope for a partial trade deal

* Graphic: World FX rates in 2019

(Recasts, updates prices, adds FX table, new comment, changes byline, dateline; previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, Oct 11 (Reuters) - The dollar fell to a three-week low on Friday as safe-haven buying eased and risk sentiment improved on hopes of progress in trade negotiations between the United States and China, as well as increased chances of an orderly British exit from the European Union.

Sterling rose to a more than three-month high versus the dollar on optimism about Brexit, while the euro advanced to a three-weak peak as risk appetite rose.

At the same time, other safe-haven currencies such as the yen and Swiss franc slid on the day.

"We have heard positive rhetoric emanating from the trade talks with China," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.

"We have also gotten positive undertones from Brexit negotiations. You have seen some of the short sterling positions close up because the odds of a deal have increased and if that's the case investors may be a little more comfortable taking dollar risk off the table," he added.

Top U.S. and Chinese negotiators wrapped up their first day of trade talks on Thursday, with U.S. President Donald Trump welcoming what he called a "very, very good negotiation with China".

Trump and China's top trade negotiator, Vice Premier Liu He, are scheduled to meet later on Friday.

A Chinese newspaper said on Friday a "partial" trade deal would benefit China and the United States, reflecting Beijing's aim of cooling the row before more U.S. tariffs kick in.

On Brexit, the 27 countries staying in the EU after Britain leaves gave the go-ahead on Friday for their chief negotiator to hold another round of intense and secret negotiations with London in a bid to secure a deal, two senior diplomatic sources said.

Michel Barnier and his British counterpart Stephen Barclay had earlier held what both sides called a "constructive" meeting in Brussels as Britain's scheduled departure date of Oct. 31 grew closer. Their meeting followed a burst of optimism after the British and Irish prime ministers said on Thursday they had found "a pathway" to a possible deal.

Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto, said sterling risk reversals, an indicator of currency sentiment in the options market, are exploding higher into positive territory, with calls now trading at a big premium to puts. The move, he said, suggested that option traders are betting sterling has turned the corner against the dollar.

In mid-morning trading, the dollar index was down 0.4% at 98.307 , after earlier declining to a 3-1/2-month low of 98.197.

The euro, meanwhile, rose 0.4% to $1.1052 , mirroring the three-week high reached on Thursday.

The safe-haven yen weakened against the dollar, which gained 0.5% to 108.53 yen. The dollar earlier touched a 2-1/2-month high against the yen.

Sterling surged to a more than three-month high of $1.2708 and a five-month peak of 87.02 pence against the euro . The pound was last up 1.7% at $1.2658.

========================================================

Currency bid prices at 10:32AM (1432 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar EUR= $1.1043 $1.1004 +0.35% -3.71% +1.1062 +1.1002

Dollar/Yen JPY= 108.5100 107.9600 +0.51% -1.59% +108.5600 +107.8600

Euro/Yen EURJPY= 119.86 118.80 +0.89% -5.04% +119.9900 +118.7400

Dollar/Swiss CHF= 0.9981 0.9969 +0.12% +1.70% +0.9990 +0.9959

Sterling/Dollar GBP= 1.2654 1.2440 +1.72% -0.81% +1.2705 +1.2409

Dollar/Canadian CAD= 1.3206 1.3290 -0.63% -3.16% +1.3300 +1.3186

Australian/Doll AUD= 0.6794 0.6761 +0.49% -3.62% +0.6805 +0.6754

ar

Euro/Swiss EURCHF= 1.1025 1.0970 +0.50% -2.03% +1.1039 +1.0966

Euro/Sterling EURGBP= 0.8725 0.8845 -1.36% -2.88% +0.8868 +0.8703

NZ NZD= 0.6334 0.6318 +0.25% -5.70% +0.6348 +0.6317

Dollar/Dollar

Dollar/Norway NOK= 9.0777 9.1238 -0.51% +5.08% +9.1290 +9.0705

Euro/Norway EURNOK= 10.0254 10.0430 -0.18% +1.21% +10.0510 +10.0207

Dollar/Sweden SEK= 9.8108 9.8403 +0.05% +9.45% +9.8465 +9.7932

Euro/Sweden EURSEK= 10.8355 10.8301 +0.05% +5.57% +10.8546 +10.8090

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Olga Cotaga in London; Editing by Kirsten Donovan)

((gertrude.chavez@thomsonreuters.com; 646-223-6322; Reuters Messaging: rm://gertrude.chavez.reuters.com@reuters.net))