* Graphic: World FX rates in 2018
* Euro, sterling gain marginally versus the dollar
* Canadian dollar holds firm on the back of a sharp rebound in oil
* Aussie, Kiwi steady on trade deal optimism
By Vatsal Srivastava
SINGAPORE, Jan 10 (Reuters) - The dollar was under pressure early
on Thursday on growing expectations the Federal Reserve will pause its
rate tightening cycle this year, while optimism about the Sino-U.S.
trade talks reduced demand for safe-haven assets.
Minutes from the Fed's Dec.18-19 meeting revealed that several
policymakers were in favour of the US central bank keeping rates
steady this year.
Broader market sentiment was also bolstered in early Asian trade
amid signs of progress in U.S.-China trade talks. Trade tensions
between the world's two largest economies had rattled markets for most
of last year.
"The Fed has acknowledged market concerns with its language.
The markets are clearly reading into this as a more accommodative
stance," said Michael McCarthy, chief markets strategist at CMC Markets.
"Optimism on US-China trade talks is also bolstering risk
sentiment...the sharp rally in oil prices is also indicative of the
fact that global growth fears were probably overdone," added
Commodity currencies such as the Canadian dollar have been the
biggest beneficiaries of improving risk sentiment this week. The
loonie fetched C$1.3206, hovering near its highest level in more than
a month thanks to a sharp rebound in oil prices.
Also supporting the loonie was the Bank of Canada's assessment
that further rate hikes may be necessary.
The dollar index was marginally lower at 95.14, after losing
0.7 percent on Wednesday. The index has weakened in four out of the
last five sessions as traders wager that US interest rates will stay
steady in 2019.
The dollar had gained 4.3 percent in 2018 as the Fed hiked rates
four times on the back of a strong domestic economy, falling
unemployment and rising wage pressures.
The euro and sterling each gained marginally on the dollar,
fetching $1.1547 and $1.2794 respectively. However, traders expect the
strength in both these currencies to fade in the coming weeks.
Economic data in the eurozone has remained consistently weaker
than estimates over the last few months, especially in France and
Germany, the eurozone's economic powerhouses. The European Central
Bank is widely expected to remain accommodative in 2019, which should
keep a lid on the single currency.
Brexit woes are most likely to dominate sentiment towards
sterling. Britain's Prime Minister Theresa May must win a vote in
parliament to get her Brexit deal approved or risk seeing Britain's
exit from the European Union descend into chaos. The vote is now due
to take place the week beginning Jan. 14.
May's chances of winning the vote look slim as the DUP, the small
Northern Irish party that usually props up her government, is opposed
to the deal.
Elsewhere, the Australian dollar , often considered a barometer
of global risk, was steady at $0.7170. Aggressive monetary stimulus
measures in China and well as hopes of a concrete U.S.-Sino trade deal
have supported the Aussie dollar.
China is Australia's largest trade partner and improving sentiment
in the world's second largest economy usually bodes well for the
(Reporting by Vatsal Srivastava Editing by Shri Navaratnam)
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