* Yen breaches 112 per dollar as markets rally
* Swiss franc also weakens, hits one-month low
* Broader FX moves stay small on low volatility
By Tommy Wilkes
LONDON, April 15 (Reuters) - The yen dropped towards its2019 low on Monday and the Swiss franc hit its weakest in nearlya month as a rally in global markets dented demand forcurrencies considered safe havens.
Currency market volatility has eased significantly in recentweeks and moves were again muted, though there were signs thatoptimism over progress in U.S.-China trade negotiations andstrong Chinese economic data was pushing investors into riskiercurrencies.
The yen fell as low as 112.09 per dollar JPY=EBS in Asiantrading, near a 2019 low of 112.135, before recovering slightlyas the European session got under way.
"USD/JPY is testing the 112.00 level and we expect the crossto break above this level this week in response to solid US dataand stabilising risk appetite," ING analysts said in a note.
The Swiss franc also eased against the euro, hitting 1.1340francsEURCHF=EBS . The Swiss currency had strengthened to a2019 high of 1.1164 francs in late March but has since lost 1.5percent.
A relatively upbeat assessment of the global economy out ofthe International Monetary Fund meeting at the end of last weekhas helped global investment sentiment.
The positive mood was extended by U.S. Treasury SecretarySteven Mnuchin saying he hoped U.S.-China trade talks wereapproaching a final lap.
Data out of the world's biggest economies also pointed to arecovery. On Friday, Chinese exports rebounded sharply and newbank loans increased far more than expected in March.
Although China's imports remained weak, the data on thewhole fuelled hopes that the economy is bottoming out after asoft patch.
The dollar also weakened slightly, allowing the euro tocement gains above $1.13. The euro rose 0.1 percent to $1.1315EUR=EBS .
The dollar index slid 0.2 percent to 96.829 .DXY .
The more positive mood helped offset any concerns aboutupcoming trade talks between the United States and Japan, inwhich Washington is expected to include a currency provision ina bilateral agreement.
"We are seeing a classical risk-on market," said MinoriUchida, chief currency analyst at MUFG Bank.
But Uchida also believes the dollar's upside may be limited,given that speculators have already built up large longpositions in it.
Data on Friday showed speculators bolstered their net longdollar position in the latest week, pushing it to the highestsince December 2015.
Sterling remained near $1.31, as it has for much of the pastweek, and volatility has fallen sharply after the European Unionand British government delayed Brexit until October. (Additional reporting by Hideyuki Sano in Tokyo; editing byJohn Stonestreet) ((thomas.wilkes@thomsonreuters.com))
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