* Risk-on mood on U.S.-China deal
* UK election result boosts sterling
(Updates to U.S. afternoon trading)
By Saqib Iqbal Ahmed
NEW YORK, Dec 13 (Reuters) - The dollar edged lower against
a basket of currencies on Friday as news of an initial
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, hurting safe-haven demand for the
greenback.
The United States and China cooled their trade war,
announcing a "Phase one" agreement that reduces some U.S.
tariffs in exchange for increased Chinese purchases of American
farm products and other goods. The United States would suspend tariffs on Chinese goods due
to take effect on Sunday, and reduce others, officials said. A
deal is expected to be signed the first week of January in
Washington by principal negotiators.
The long-awaited deal could dial down tensions between the
United States and China and provide some relief to investors,
who have been buffeted for months by worries that a full-blown
trade war would pressure global economic growth.
"The market was flooded with many headlines this morning and
some were contradictory, but overall we believed this weekend's
tariffs would probably be delayed or canceled, so the end result
is not too surprising," said John Doyle, vice president for
dealing and trading at Tempus Inc in Washington.
China agreed to aim to purchase $50 billion in farm products
a year, United States Trade Representative Robert Lighthizer
told reporters at the White House on Friday.
Asked specifically about the $50 billion figure, officials
in Beijing said that details on value will be disclosed later.
Lingering uncertainty about the deal kept investors from
rushing into riskier currencies, analysts said.
"Some have been burned in the past for believing there was
true progress, only to be disappointed," Tempus' Doyle said.
The dollar index .DXY , which measures the greenback
against six major currencies, was down 0.18% at 97.22, after
slipping as low as 96.719.
Appetite for trade-sensitive risky currencies, such as the
Australian dollar, remained low. The Aussie was down 0.59%
against the dollar.
The dollar was near flat 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.
Although the offshore yuan was initially boosted by trade
deal hopes, it was last down about 0.9% versus the dollar.
Sterling was well-supported day as investors rushed to
unwind bets on a weaker pound after a resounding election
victory for Prime Minister Boris Johnson's Conservative Party.
Johnson's win will allow him to end three years of political
paralysis and take Britain out of the European Union in an
orderly manner in a matter of weeks.
The pound was up 1.31% at $1.3335. GBP=
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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