* Risk-on mood on reports of U.S.-China deal terms
* UK election result boosts European currencies
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Elizabeth Howcroft
Dec 13 (Reuters) - The dollar fell more than half a percent
on Friday, with global risk appetite boosted by the apparent
clearing of two clouds that have been hanging over world markets
-- U.S.-China tariffs due on Dec. 15 and Britain's election.
The U.S.-China trade war looked set to de-escalate after
U.S. sources said Washington had set out its terms for a trade
deal, offering to suspend some of the new wave of tariffs due on
Sunday and to cut others. The Japanese yen fell 0.3% and is approaching its lowest
versus the dollar in more than six months as demand for the
safe-haven currency went down JPY=EBS .
The dollar index .DXY was down 0.6%.
After 17 months of market-moving comments from both the U.S.
and China sides of the trade war, some uncertainty remains and
traders will be waiting until the Dec. 15 deadline has passed
before fully boosting risk appetite.
"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.
Although the offshore yuan was initially boosted on trade
deal hopes, it was down 0.6% versus the dollar in early London
trading, partially erasing the previous day's gains CNH=EBS .
Nguyen said she expected the yuan to appreciate to below 6.9
- at least temporarily - when a trade deal is signed.
Meanwhile, European currencies were boosted by the
market-friendly results of Britain's election, which delivered a
bigger-than-expected parliamentary majority for Prime Minister
Boris Johnson's pro-Brexit Conservative party. The euro was up 0.4% against the dollar, having hit a
four-month high in overnight trading before paring gains
EUR=EBS .
The pound sterling rose as much as $1.3516 versus the dollar
GBP=D3 and 82.78 pence per euro EURGBP=D3 after an exit poll
suggested the Conservatives would win an outright majority.
With results still coming in, the Conservatives look set to
win their best result since 1987. Markets consider that this result paves the way for Britain
to negotiate its departure from the European Union. But, with a
trade deal deadline of December 2020, the uncertainty is far
from over. "There is a risk of some disappointment if businesses
continue to hold back on spending until they have more clarity
on the future trading relationship," currency analysts at MUFG
wrote in a note to clients.
(Editing by Timothy Heritage)