(Corrects to insert apostrophe on investors' in lead paragraph)
* Dollar, euro flat as traders await Thursday ECB meeting
* Rate cuts expected, decision a harbinger for Fed, BoJ
* Tepid risk-on mood holds as bonds and yen sold
By Tom Westbrook
SINGAPORE, Sept 11 (Reuters) - The dollar steadied on
Wednesday as investors' appetite for risk showed cautious
improvement and the yen weakened in the shift away from safe
havens, but currencies kept to tight ranges ahead of a series of
major central bank meetings over the next week.
Investor focus for now is centred on the European Central
Bank's meeting on Thursday. Expectations it will push interest
rates even further into negative territory have weighed on the
euro EUR=EBS , which has shed 3% since June.
The single currency edged higher to $1.1050, with bets
divided on the likely scope and style of any stimulus.
"Nobody really wants to commit yet," said Matt Simpson,
senior market analyst at Gain Capital in Singapore.
"We've had the trade-war boost last week, it's filtered
through this week, and so markets are taking a bit of a
breather," he said. "Now it's in that little in-between stage -
what's going to keep to keep that value going?"
The ECB decision is likely to set the tone for upcoming
rate-setting decisions by the U.S. Federal Reserve and the Bank
of Japan next week, and for the broader global risk appetite.
Since being fired by news last week that a new round of
U.S.-China trade talks were scheduled for next month, the
risk-on sentiment has begun to fade.
But there was still enough optimism left for Asian equities
to move higher, and for U.S. bond yields to hold near a
one-month high, while the retreat from safe havens saw the yen
ease to 107.77 per dollar, its weakest since Aug. 1.
The pound GBP=D3 stood at $1.2356, near its six-week high
of $1.2385 hit earlier in the week on the reduced chances for
Britain to crash out of the European Union without a divorce
deal.
The Chinese yuan CNY= and Australian dollar AUD=D3
briefly jumped after the editor of Commmunist Party newspaper
The Global Times tweeted that China would introduce measures to
mitigate the trade-war impact.
Overhanging the buying of riskier currencies, however, are
signs of a slowdown in global demand.
ECB policymakers are leaning toward a revival package that
includes a rate cut, a pledge to keep rates low for longer and
compensation for banks over the side-effects of negative rates,
five sources familiar with the discussion said last week.
Germany also signalled its readiness for relaxing its
staunch opposition to deficit spending to support the economy.
On the other hand, concerns have been building that global
central banks are reaching the limits of their stimulus options,
especially those with negative interest rates and sub-zero
long-term sovereign bond yields.
"It remains to be seen whether the incoming policy stimulus
by the ECB will be enough to offset the headwinds faced by the
bloc," said Han Tan, a market analyst at brokerage FXTM.
"Should the ECB not live up to markets' dovish expectations
this week, that may allow the euro to post some immediate
gains," he said in a note.
"The ECB's policy decision and conveyed outlook may also
prompt immediate moves in the dollar, considering that the Euro
accounts for more than half of the dollar index."
The dollar index .DXY was steady at 98.332.
Much of the broader positive mood in recent days has been
driven by optimism that a high-level meeting of U.S. and Chinese
negotiators at Washington next month can deliver some sort of
trade-war circuit breaker.
That was tamped down somewhat by White House trade advisor
Peter Navarro on Tuesday, when he urged patience about resolving
the two-year trade dispute between the world's two largest
economies and said to "let the process take its course."
The prospect of a breakthrough has stoked appetite for Asian
currencies such as the trade-exposed South Korean won KRW= ,
which drifted higher to 1193.35 per dollar, close to its highest
since Aug. 2.