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FOREX-Yuan strengthens as Biden-Xi seek reset; dollar waits for data

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    * Yuan hits 5-month peak as Biden-Xi seem friendly
    * Euro struggles to rally from 16-month trough
    * Bitcoin drops 5%

    By Tom Westbrook
    SYDNEY, Nov 16 (Reuters) - The yuan scaled a five-month high
in Asia on Tuesday as traders welcomed dialogue between the U.S.
and Chinese presidents, while the dollar held near a 16-month
peak against the euro ahead of U.S. retail sales data that could
influence the outlook for interest rates.
    Calling U.S. President Joe Biden an "old friend," his
Chinese counterpart Xi Jinping said their countries must
increase communication and cooperation - remarks that had
markets hoping cordiality could lead to a reduction in tariffs. 
    Support for riskier currencies ebbed as further readouts
from both sides showed plenty of differences remain in ties
between the world's two biggest economies, but the yuan was kept
supported at 6.3728 per dollar.
    It had climbed as far as 6.3666 per dollar.
    The euro, at $1.1377, lacks major support until
around $1.12 and was pounded on Monday amid concerns about
COVID-19 outbreaks on the continent and insistence from Europe's
central bank chief that she won't be hurried in to rate hikes.  
 
    The risk-sensitive Australian and New Zealand dollars made
modest gains but retraced them as traders looked ahead to the
U.S. retail sales data due at 1300 GMT. The yen
steadied at 114.15 per dollar and the Aussie was last
flat at $0.7344.
    "U.S. retail sales today is the big watch to gauge if demand
is resilient amid inflation," said Vishnu Varathan, head of
economics at Mizuho Bank in Singapore. If it is, that could mean
more pressure on the Federal Reserve to hike rates sooner.
    Another factor keeping moves small in the Asia session was
talk that Biden might soon announce his pick for Federal Reserve
chair - probably either a reappointment of Jerome Powell or a
promotion for Fed Governor Lael Brainard.
    "If Powell is chosen, we expect no impact on the dollar. But
if Brainard is chosen, we expect a short term fall in U.S.
interest rates and the dollar because it is widely believed a
Brainard-led FOMC would be more dovish than otherwise," said
Commonwealth Bank of Australia analyst Carol Kong.    
    Earlier in the Asia session, Reserve Bank of Australia head
Philip Lowe again pushed back on markets pricing in RBA rate
hikes as soon as 2022, but it had little immediate effect on
traders who expect 100 basis points of tightening by early 2023.

    The New Zealand dollar was steady at $0.7035 and in
a waiting mode before next week's Reserve Bank of New Zealand
meeting where markets have priced in a 25 basis point rate hike
and a 40% chance that it will be 50 basis points.
    Sterling was steady at $1.3419.
    Euro crosses were also languishing after Monday's insistence
from European Central Bank chief Christine Lagarde that hikes
could do more harm than good at this point - a dovish contrast
with hawkish hints being dropped by other central
bankers.
    The common currency's tumble to $1.1356 on Monday propelled
the U.S. dollar index to its 2021 high of 95.595 as well
as hitting the euro pretty broadly.    
    The gulf in tone across the Channel sent the euro on its
steepest slide against the pound in six months on Monday as Bank
of England Governor Andrew Bailey told a parliamentary committee
he was "very uneasy" about inflation.
    Canada's central bank chief Tiff Macklem was even more
forthright and said "we are getting closer" to hikes in an
opinion piece, driving the Canadian dollar to a four-and-a-half
year high against the euro.
    Bitcoin was down 5% and testing support at
$60,600.
    
    ========================================================
    Currency bid prices at 0633 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar                  $1.1375        $1.1367     +0.07%         -6.90%      +1.1386     +1.1360
 Dollar/Yen                   114.1900       114.1850    +0.01%         +10.56%     +114.3050   +114.1350
 Euro/Yen         <EURJPY=EB  129.88         129.74      +0.11%         +2.33%      +130.0700   +129.7000
                  S>                                                                            
 Dollar/Swiss                 0.9250         0.9246      +0.02%         +4.53%      +0.9257     +0.9238
 Sterling/Dollar              1.3422         1.3415      +0.05%         -1.76%      +1.3437     +1.3412
 Dollar/Canadian              1.2518         1.2511      +0.06%         -1.70%      +1.2522     +1.2493
 Aussie/Dollar                0.7338         0.7348      -0.13%         -4.61%      +0.7368     +0.7336
 NZ                           0.7033         0.7045      -0.16%         -2.06%      +0.7063     +0.7033
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Volatilities 
Tokyo Forex market info from BOJ

    
 (Editing by Shri Navaratnam, Jacqueline Wong & Simon
Cameron-Moore)
  

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