* U.S. economic data supports dollar
* China outlook optimism buoys Asian currencies
* Aussie, pound on edge ahead of possible monetary easing
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Jan 20 (Reuters) - The dollar began the week on a
firm note on Monday as economic data pointed to strength right
across the U.S. economy, while optimism on the outlook for China
supported Asian currencies.
The greenback held steady near a one-week high against the
euro EUR= , at $1.1095, and just below an eight-month peak on
the Japanese yen, at 110.17 yen per dollar JPY= . Against a
basket of currencies it was flat .DXY .
China's yuan edged 0.2% higher to a fresh six-month top,
while the Australian and New Zealand dollars also edged ahead.
Moves were slight and volumes thin as Chinese New Year
approaches in Asia and with U.S markets closed for Martin Luther
King day on Monday.
Figures on Friday showed U.S. homebuilding surged to a
13-year high in December, with retail sales also on the rise and
a gauge of manufacturing activity rebounding to its highest in
eight months. Futures pricing suggests nobody thinks the U.S. Federal
Reserve will cut rates when it meets at the end of the month.
FEDWATCH
The strength in the United States comes as European economic
data points in the opposite direction, though with possible
signs of bottoming out both there and in China.
"We're seeing consistently strong data, still, from the
United States, and that's on the back of a boost that it will
probably get from this U.S.-China trade agreement," said Jeffrey
Halley, senior market analyst for Asia Pacific at broker OANDA.
"I think the U.S. dollar will continue to outperform against
the major currencies," he said, adding he counted the chance of
a Fed rate cut soon at zero. "I think the bar for a rate cut is
quite high at the moment."
China on Friday posted its slowest annual growth figure in
almost 30 years, although December data showed revived business
confidence and quickening factory output.
That helped the yuan to a six-month high of 6.8457 per
dollar CNY= after the country's benchmark lending rate was
held steady on Monday, leading gains across Asia.
The Australian AUD=D3 and New Zealand dollars NZD=D3
rose about 0.2%, with emerging markets currencies also nudging
ahead. EMRG/FRX AUD/
"They are catching a big tailwind from this trade deal,"
said Halley. "It does imply better times ahead on the resource
side and that's why we're seeing some strength in the Aussie."
However caution remained as investors look to Australian
jobs data due on Thursday for a crucial clue to the next move
for Australian interest rates.
The Reserve Bank of Australia meets next month with
widespread bushfires, and their depressing effect on already
weak consumer sentiment, adding to the case for further stimulus
following three rate cuts last year.
Futures are pricing a 46% chance of a rate cut when the RBA
meets on Feb. 4, but that will likely shift higher if Thursday's
read on unemployment puts it higher than market expectations of
5.2%. 0#YIB
Similarly, the British pound GBP= sat at a week-low of
$1.3000, with markets apprehensive that the Bank of England may
cut rates at the month's end - especially if business surveys
this week seem sour. BOEWATCH