* Major currencies little changed in early Asian trade
* Investors stick to hopes of U.S.-China trade deal
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Hideyuki Sano
TOKYO, Nov 18 (Reuters) - Major currencies were off to a
cautious start on Monday as market players looked to whether
Washington and Beijing can soon sign off on a deal to end their
trade war that has been a drag on the global economic growth.
Chinese state media Xinhua said on Sunday the two countries
had "constructive talks" on trade in a high-level phone call on
Saturday, but it gave no further details. Against the yen, the dollar was traded at 108.75 yen JPY= ,
recovering from 108.235 touched on Thursday as rising hopes of a
U.S.-China trade deal undercut the yen.
The currency faces a resistance around 109.00, where it has
its 200-day moving average. A break-through there could open the
way for a retest of its five-month high around 109.50 touched
earlier this month.
Rising risk appetite was mildly positive for the euro, which
stood at $1.10505 EUR= , bouncing back from one-month low of
$1.0989 set on Thursday.
That helped to push down the dollar index =USD to 97.980,
near its lowest levels since Nov. 7.
"Currencies will be driven by headlines related to the
U.S.-China trade issues. Markets are expecting some sort of
answer to that soon," said Yukio Ishizuki, senior strategist at
Daiwa Securities.
The "phase one" deal was originally expected to be signed on
the sideline of Asian-Pacific countries' summit scheduled last
weekend before the host nation Chile cancelled the event due to
domestic riots.
The tariff war between the United States and China has
already taken its toll on the world's manufacturing sector.
Data from the U.S. Federal Reserve on Friday showed the U.S.
manufacturing downturn deepened in October, with output at
factories tumbling 0.6%, the most since May 2018, after dropping
0.5% in September. U.S. retail sales rebounded moderately in October but
consumers did cut back on purchases of big-ticket household
items like furniture and on discretionary spending.
Still, hopes of a U.S.-China deal have kept investor
optimism afloat, with U.S. stock prices hitting a record high on
Friday.
Elsewhere, sterling was extending its slow recovery to reach
its highest levels in two weeks, trading at $1.2919 GBP=D4 , up
0.12% so far on the day.
Investors will keep an eye on developments in Hong Kong,
where police trapped hundreds of protesters inside a major
university, sealing off roads in the area after almost two
straight days of standoffs that have raised fears of a bloody
showdown with both sides refusing to back down. The turmoil could hit Hong Kong share prices and could dent
risk-sensitive currencies in the region, such as the Australian
dollar.
The Aussie traded down slightly at $0.6815 AUD=D4 .