* Dollar index inches down, softer against yen, euro
* Hopes of end to U.S.-China trade war high
* Investors awaiting results of trade talks
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Recasts with moves in USD, updates prices, adds comment)
By Dhara Ranasinghe
LONDON, Nov 6 (Reuters) - The dollar drifted lower against
other major currencies on Wednesday as investors awaited fresh
developments in the U.S.-China trade talks.
As the United States and China work to narrow their
differences enough to sign a "phase one" trade deal as early as
this month, hopes of a breakthrough have boosted sentiment
across world markets. But after sizeable moves on Tuesday, which included a
strengthening in China's offshore yuan to three-month highs
against the dollar, currency markets moved into wait-and-see
mode.
That sentiment was echoed in global stock markets, which
steadied after a three-day rally.
"The market now wants confirmation that there is a venue,
that this (phase one deal) will be signed," said Jane Foley,
senior currency strategist at Rabobank.
"A lot of good news was built into the price and unless we
get something more, a little bit of disappointment will come
through."
At 1130 GMT the dollar index, which measures the dollar's
value against other major currencies .DXY , was a fifth of a
percent lower at 97.798 after rising 0.4% the previous day.
The dollar was 0.2% softer at 109.01 yen, although still
within sight of a three-months high hit last week at 109.285.
Europe's common currency, meanwhile, was a touch firmer at
$1.1089 EUR= , having dropped 0.5% against a broadly-robust
greenback on Tuesday.
The Swiss franc CHF= changed hands at 0.9929 to the
dollar, little changed on the day, following its 0.5% fall the
previous day.
Analysts said better-than-expected U.S. economic data in the
past week had eased expectations for further easing from the
U.S. Federal Reserve and that this boded well for the dollar
outlook.
A survey of the vast U.S. service sector published on
Tuesday showed that business sentiment had improved in October
from a three-year low in September. The rebound is a welcome sign for dollar bulls as a fall in
the service sector index would have suggested that the malaise
among manufacturers hit by the trade war was also infecting the
service sector. That followed a strong U.S. employment report on
Friday.
"Latest data has helped eased concern about a sharp slowdown
in growth," said Lee Hardman, a currency strategist at MUFG.
"We have now had the U.S. ISM and jobs report and they were
both stronger than expected and that provides a firm foundation
for the dollar this month."
Data released on Wednesday showed German industrial orders
rose more than expected in September, offering a glimmer of hope
for an export-powered economy hit hard by global trade tensions.
The generally positive mood supported the risk-sensitive
Australian dollar, which changed hands at $0.6899 AUD=D4 . It
was little changed on the day but has maintained gains of 3.4%
since hitting a 10-1/2-year low on Oct. 2.
China's offshore yuan steadied around 7.00 per dollar
CNH=EBS in Europe after having risen to a three-month high of
6.9867 to the dollar on Tuesday on hopes for a trade truce.
The currency has gained almost 3% from its record low in the
offshore trade marked in early September.
G7 implied vol https://tmsnrt.rs/2NmpKXh
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>