* Trade-exposed currencies jump on U.S.-China trade talks
* Yen sold as risk-on mood returns
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tom Westbrook
SINGAPORE, Sept 5 (Reuters) - Risk-sensitive currencies such
as the Aussie and yuan rallied on Thursday as investors cheered
the announcement of U.S.-China trade talks for next month and
abandoned safe haven assets such as yen.
The Australian and New Zealand dollars, AUD=D3 NZD=D3
Chinese yuan CNY= and South Korean won KRW= all jumped
against the dollar, while the yen JPY=EBS fell nearly 0.4% to
106.75 per dollar, its cheapest in more than three weeks.
The early-October talks will be held in Washington, China's
commerce ministry announced, following a phone call between
China's Vice Premier Liu He, U.S. Treasury Secretary Steven
Mnuchin and U.S. Trade Representative Robert Lighthizer.
The news followed optimism that a no-deal Brexit could be
avoided, which sent the pound GBP=D3 sharply higher, and a
potential breakthrough for the Hong Kong political crisis.
Those political developments, seen as positive for
investment, also fueled a jump in Asian equities and bond
yields. "We've seen markets hold up relatively well overnight, this
(trade) news has injected a fair amount of optimism in markets,"
said Prashant Newnaha, senior rates strategist at TD Securities
in Singapore.
"It does seem that the markets were positioning more
bearishly, and now we've gotten this potential good news and the
markets are running with it," he said, adding global economic
indicators had also recently been showing some green shoots.
The Australian dollar rose to a one-month high of $0.6825,
seen as a technical resistance level while the New Zealand
dollar hit a one-week peak of $0.6377. The trade-exposed won
climbed the most of Asia's currencies to 1198.00 per dollar.
Against a basket of currencies, the dollar .DXY lifted a
little from a one-week low to 98.492.
The Canadian dollar CAD= spiked sharply to C$1.3344 per
dollar after the Bank of Canada left interest rates on hold and
sounded less dovish than the market had expected.
The pound sat around $1.2245 and euro EUR=EBS at $1.1030,
holding overnight gains.
They had climbed after British parliament voted on Wednesday
to prevent Johnson from taking Britain out of the European Union
without a deal on Oct. 31, but rejected his first bid to call a
snap election two weeks before the scheduled exit. That still leaves Brexit up in the air, with possible
outcomes ranging from a no-deal exit to abandoning the whole
endeavour, prompting some to sound a note of caution.
"It's important to keep in mind that the situation continues
to look pretty bad," J.P. Morgan analysts reminded investors in
a market note, pointing out that Johnson, a staunch Brexiteer,
leads opinion polls.
Nevertheless, the fact that a hard Brexit has, for now, been
removed as an immediate risk gave markets some cheer, as did
Hong Kong leader Carrie Lam's move to withdraw the bill that
triggered months of violent protests in the city. "While there is no 'all clear' on market concerns, investor
sentiment pulled back from extremes...the deferral of a no-deal
Brexit, soothed nerves," said Michael McCarthy, chief market
strategist at brokerage CMC Markets in Sydney.