* Markets on edge before signing of trade deal
* Yen inches higher, yuan drifts lower
* UK inflation data in focus for pound
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tom Westbrook
SINGAPORE, Jan 15 (Reuters) - The safe-haven yen held firm
and riskier Asian currencies softened a little on Wednesday, as
currency investors awaited the signing of the U.S.-China trade
deal with trepidation.
The formal agreement is aimed at drawing a line underneath
18 months of tit-for-tat tariff hikes that have hurt global
growth.
But hopes that it may herald warmer relations between the
world's top two economies were dented late Tuesday when U.S.
Treasury Secretary Steven Mnuchin said that current tariffs on
Chinese goods would stay, pending further talks. That toppled China's trade-sensitive yuan from a six-month
peak and lifted the yen from a seven-month trough. But moves in
morning trade were slight as markets wait to see the deal inked.
"The deal is priced in," said National Australia Bank's head
of FX strategy, Ray Attrill. "I can't see any reason why the
yuan should continue to strengthen, given the limited amount of
tariff rollbacks that are contained in this deal."
The yuan is the currency most sensitive to Sino-U.S. trade
relations, and it retreated 0.2% to 6.8990 in offshore trade
CNH= .
The yen JPY= was nearly 0.1% firmer at 109.91. The euro
EUR= was steady at $1.1129 and the Swiss franc CHF= held on
to overnight gains to sit at 0.9672 per dollar.
The trade-exposed Australian and New Zealand dollars each
eased by 0.1%, with the Aussie AUD=D3 last at $0.6895 and the
kiwi NZD=D3 at $0.6606. Against a basket of currencies the
U.S. dollar held at 97.372 .DXY .
U.S. President Donald Trump is slated to sign the trade
agreement with Chinese Vice Premier Liu He at the White House at
1630 GMT.
Washington has agreed to suspend tariffs on $160 billion of
some Chinese-made electronics, and to halve existing tariffs on
$120 billion of other goods to 7.5%.
A source told Reuters that China has pledged to buy almost
$80 billion of additional manufactured goods from the United
States over the next two years under the deal, although some
U.S. trade experts called that unrealistic.
Mnuchin said deal documents will be released on Wednesday.
Elsewhere the British pound GBP= trod water at $1.3023,
ahead of inflation data due at 0930 GMT.
The consensus expectation is for core annual inflation to
hold steady at 1.7%. However several recent hints at rate cuts
from Bank of England policymakers have investors on edge that a
miss on the downside may strengthen the case for monetary
easing.
Money markets are now pricing in a 43% chance for a 25 basis
point cut in rates at the end of this month. BOEWATCH
"If we saw core inflation coming in at say, 1.4%, then I
think that would inflame the situation," said Chris Weston, head
of research at Melbourne brokerage Pepperstone.
He added that business surveys next week would be even more
closely watched. "If they don't show any kind of meaningful
rebound, then you're probably going to get a market that's
pricing in (the chance of a cut) at north of 50%."