* Dollar hangs on to late-week gains

* Aussie drifts higher, but capped by rate-cut risk

* China rate-set eyed at 0130 GMT

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook

SINGAPORE, Jan 20 (Reuters) - The dollar began the week on a firm note on Monday as economic data pointed to strength right across the U.S. economy, reducing the likelihood of interest rate cuts.

The greenback held steady near a one-week high against the euro, at $1.1096, and just below an eight-month peak on the Japanese yen, at 110.19 yen per dollar.

"People are just searching out good news across the world," said Chris Weston, Head of Research at Melbourne brokerage Pepperstone.

"An emerging theme driving FX in 2020, in the absence of central bank divergence, I think, is economic divergence and relative economic trends," he added.

Figures on Friday showed U.S. homebuilding surged to a 13-year high in December, with retail sales also on the rise and a gauge of manufacturing activity rebounding to its highest in eight months.

Futures pricing suggests nobody thinks the U.S. Federal Reserve will cut rates when it meets at the end of the month.

The strength comes as European economic data points in the opposite direction. The German economy last week posted its weakest growth since 2013, while British inflation is anaemic and retail sales are sliding.

The pound edged lower on Monday to $1.3002, its weakest in a week. Against a basket of currencies, the greenback was steady at 97.620, a whisker below a three-week high hit on Friday.

Trade was tepid leading in to a U.S. holiday on Monday.

China, meanwhile, on Friday posted its slowest annual growth figure in almost 30 years, although December data showed revived business confidence and quickening factory output.

China's financial markets are evenly divided over whether the benchmark lending rate will be lowered or kept steady in response, when it is set at 0930 GMT on Monday.

The yuan held flat at 6.8643 per dollar in offshore trade , not far below a six-month high it reached last week.

The Australian and New Zealand dollars crept up slightly, although gains were capped as investors look to Australian jobs data due on Thursday for a crucial clue to the next move for Australian interest rates.

The Aussie last traded 0.1% firmer at $0.6880, while the kiwi rose by the same margin to $0.6615.

The Reserve Bank of Australia meets next month with widespread bushfires, and their depressing effect on already weak consumer sentiment, adding to the case for further stimulus following three rate cuts last year.