* U.S. reaches deal in principle on trade with China -source
* Euro about flat after ECB meeting
* Sterling eases as voting gets underway
(Updates to U.S. afternoon trading)
By Saqib Iqbal Ahmed
NEW YORK, Dec 12 (Reuters) - The dollar jumped to a near
two-week high against the safe-haven Japanese yen on Thursday on
reports that the United States has reached a deal in principle
on trade with China, just days before new U.S. tariffs on
Chinese imports were due to be imposed.
The United States has reached a "phase-one" trade deal in
principle with China, a source briefed on talks between the two
nations said on Thursday, saying a statement from the White
House was expected soon. The report follows U.S. President Donald Trump's comments
from earlier in the session when he said the United States was
"very close" to nailing down a deal with China.
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, the dollar rose 0.75% to
109.35, the highest since December 2.
Against the offshore Chinese yuan, the dollar fell 1.06% to
a one-month low.
"We have seen a strong risk-on reaction in the FX markets,"
said Vassili Serebriakov, an FX strategist at UBS in New York.
Investors have been watching U.S.-China trade talks to see
whether the United States would impose tariffs on nearly $160
billion in Chinese consumer goods by Dec. 15.
The dollar index .DXY , which measures the greenback
against six major currencies, was up 0.3%.
Thursday's strength helped the dollar reclaim most of the
ground lost on Wednesday after the Federal Reserve held interest
rates steady and said a significant, persistent inflation rise
would be needed to hike rates again. The euro was 0.11% lower against the dollar after the
European Central Bank maintained its ultra-easy monetary policy
at Christine Lagarde's first meeting in charge on Thursday.
"It's pretty much a status quo in many ways," said Brad
Bechtel, managing director FX at Jefferies in New York.
The British pound stepped back from a near nine-month high
on Thursday as investors booked profits from a recent rally in
case of a surprise UK election outcome later in the day.
Sterling was 0.28% lower against the dollar. Voters were heading to the polls in an election that will
pave the way for Brexit under Prime Minister Boris Johnson or
propel Britain toward another referendum that could ultimately
reverse the decision to leave the European Union.
Voting ends at 2200 GMT (5 p.m. ET), with exit polls and
early results due after that. Traders expect an outcome as early
as 0300 GMT on Friday (10 p.m. ET on Thursday).
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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