* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee and Hideyuki Sano
LONDON/TOKYO, Dec 17 (Reuters) - The Australian dollar fell
to a weekly low on Tuesday after the central bank opened the
door to another cut in interest rates as early as February and
other currencies also weakened due to a fading in trade-related
euphoria.
In Britain, the pound tanked as Prime Minister Boris
Johnson, embolded by election victory, put the risk of a hard
Brexit back on the table, saying he would make extending the
transition period beyond 2020 illegal.
The Australian dollar lost 0.5% to $0.6844 AUD=D3 after
minutes of its December policy meeting showed the central bank's
board was concerned that wage growth was too weak to revive
either inflation or consumption. Last week saw the apparent removal of the two main risks
dominating global markets: a preliminary trade deal was reached
between the U.S. and China, and the UK Prime Minister won a
majority in the election, promising to end uncertainty around
the UK's departure from the European Union. But by Tuesday, optimism was starting to subside, with the
safe-haven Japanese yen up 0.1% JPY=EBS and the trade-exposed
New Zealand dollar down 0.3% NZD=D3 , as investors cautiously
waited for details of the agreement.
The deal, announced on Friday after more than two-and-a-half
years of volatile negotiations between Washington and Beijing,
will reduce U.S. tariffs on Chinese goods in exchange for
increased Chinese purchases of some U.S. goods. Fitch ratings agency said that the "phase one" deal eased
U.S.-China tensions but that renewed escalation remains a
significant risk, with the issue of technology posing an
obstacle to full resolution. "The Aussie is weaker on the back of the back of the more
dovish than expected RBA minutes," said Valentin Marinov, head
of G10 FX strategy at Credit Agricole.
"That said, market expectations of a Phase 1 US-China trade
deal could limit the currency's downside in the near term."
The drop in the Australian dollar and the pound boosted the
greenback, with the U.S. currency trading 0.1% stronger against
a basket of its rivals .DXY .
Against the dollar, the British currency GBP=D3 fell more
than 1% to $1.3155, erasing its post-election gains, but was
last above that level at $1.3198.
The trade-exposed Scandinavian currencies also took a hit,
with the euro up 0.2% against the Swedish crown EURSEK=D3 and
up 0.3% versus the Norwegian crown EURNOK=D3 .
The euro was up 1.2% against the Brexit-startled pound
EURGBP=D3 and up 0.2% against the U.S. dollar EUR=EBS at
$1.1162.
FX valuations https://tmsnrt.rs/35vEFVO
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>