Dollar slips as investors await US-China trade outcome

• The dollar fell against the Japanese yen and drifted lower versus other currencies on Wednesday.
• A senior official of the Trump administration told Reuters on Wednesday a meeting between US President Donald Trump and Chinese President Xi Jinping.
• The dollar pared losses against a basket of currencies after the Reuters report.

NEW YORK: The dollar fell against the Japanese yen and drifted lower versus other currencies on Wednesday, with the market in consolidation mode, as investors sought more clarity about ongoing US-China trade negotiations.

A senior official of the Trump administration told Reuters on Wednesday a meeting between US President Donald Trump and Chinese President Xi Jinping to sign a long-awaited interim trade deal could be delayed until December as discussions continue over terms and venue.

The dollar pared losses against a basket of currencies after the Reuters report, catching a bit of

safe-haven bid against other currencies such as the euro. But it hit a session low against another safe haven, the yen, on the news.

"The bottom line is that markets need to be fully convinced that we're out of the woods, that we're past the worst," said Erik Nelson, currency strategist, at Wells Fargo Securities in New York. "So far, it's (US-China trade deal) not done yet."

Still, 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.

After sizable 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.

In afternoon trading, the dollar index, which measures the greenback's value against other major currencies, was 0.1% lower at 97.875, after hitting a three-week high on Tuesday.

The dollar was 0.2% softer against the yen at 108.91 yen, although still within sight of a three-month high hit last week at 109.285.

Europe's common currency, meanwhile, was slightly lower on the day at $1.1069. The euro earlier benefited from data released on Wednesday showing 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 Swiss franc was also modestly higher at 0.9924 to the dollar.

Analysts said better-than-expected US economic data in the past week had eased expectations for further easing from the US Federal Reserve and that this boded well for the dollar outlook.

A survey of the vast US service sector published on Tuesday showed 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 US employment report on Friday.