FOREX-Dollar set for weekly advance amid trade deal optimism

By Chibuike Oguh

NEW YORK, May 9 (Reuters) - The dollar was set for a weekly gain against major currencies, including the Swiss franc, yen and euro on Friday, after a U.S.-UK trade deal increased optimism about upcoming U.S.-China talks.

Financial markets are heading into the weekend with the focus squarely on trade negotiations between Washington and Beijing due to begin on Saturday in Switzerland.

President Donald Trump had announced on Thursday a U.S.-UK trade deal that left in place a 10% baseline tariff on British goods, but lowered prohibitive duties on vehicle imports.

"There's strong optimism across the market of progress in US-China trade talks in particular and more broadly more trade deals," said Matthew Weller, head of market research at StoneX.

"It does seem like the Trump administration is perhaps extending a series of olive branches to different countries and perhaps the worst of the trade wars and tariffs is ... behind us. That's what the market is starting to price in."

The U.S. dollar CHF=EBS is on track for the fourth straight week of gains against the Swiss franc. But it is down 0.35% to 0.82865 franc on the session.

The euro EUR=EBS is set for the third straight week of losses against the dollar. It was, however, last up 0.34% on the day at $1.126675.

The U.S. currency JPY=EBS is on track for the third consecutive week of gains against the Japanese yen although it is down 0.61% to 145.025 yen on the session.

Sterling GBP=D3 was trading higher and was set for a weekly gain after losing ground on Thursday following the announcement of the U.S.-UK trade deal. It strengthened 0.42% to $1.3302.

Central bank decisions this week diverged: the Federal Reserve left rates unchanged while the Bank of England cut rates. The central banks of Sweden and Norway held them steady.

In contrast with other G10 currencies, the dollar was lower against several Asian currencies this week after a shock surge in the Taiwan dollar TWD=TP.

After a volatile few days, it has settled around 30 to the dollar, more than 6% stronger than at the end of April.

The dollar CNH= weakened 0.08% to 7.236 versus the offshore Chinese yuan, but was set for a weekly gain. The Korean won KRW= strengthened 0.48% against the dollar to 1,397.98 per dollar, also on track to finish the week higher.

Bitcoin BTC= climbed back above $100,000, reflecting a refreshed appetite for risk-taking in markets' more speculative corners.