* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Jan 17 (Reuters) - The Australian dollar rallied on
Friday as Chinese data showed pressure on the world's
second-biggest economy may be starting to diminish, with the
offshore yuan rising to a six-month high against the greenback.
The Aussie is often traded as a liquid proxy for the Chinese
yuan as the country's small, open economy is heavily reliant on
exports to China.
Though China's economy grew 6.0% in the December quarter
from a year earlier, and 2019 growth of 6.1% was the slowest in
29 years, Beijing is widely expected to introduce more stimulus
measures in 2020 while investment and demand remain
sluggish. "The Chinese data overnight offered some cause for optimism
with the Phase 1 trade deal with the U.S. partially lifting the
cloud of uncertainty hanging over the economy," said Craig
Erlam, senior market analyst at OANDA.
The Aussie AUD=D3 and its New Zealand counterpart NZD=D3
rose 0.2% against the dollar respectively, while the Chinese
currency in the offshore market CNH=D3 rose 0.2% to 6.8636
yuan per dollar, its strongest level since July 2019.
Optimism over the Phase 1 U.S.-China trade deal signed on
Wednesday has also raised hopes that the economy may be
bottoming out.
"There were rebounds in some areas, such as fixed income
investments and industrial output, which is in line with other
signs that China's deceleration is coming to an end," said
Masashi Hashimoto, senior currency analyst at MUFG Bank in
Tokyo.
The dollar held its ground against a broad basket of
currencies .DXY but was on track for a small weekly loss, with
the dollar index tracking its strength against six of its major
peers little changed at 97.31.
Recent data has been mildly supportive of the greenback.
U.S. retail sales increased for a third straight month in
December, and the number of Americans filing claims for
unemployment benefits dropped for a fifth straight week last
week, showing that the labour market remained strong.
Elsewhere, the British pound GBP=D3 steadied below $1.31
on Friday and was on track for its first weekly gain in a month,
despite a week of torrid data including unexpectedly low
inflation and dovish comments from central bank policymakers.