FOREX-Dollar holds ground against rivals as trade talk outcome awaited

* Dollar supported by Sino-U.S. trade deal, strong U.S. data
* U.S. service sector index rebounds more than expected
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Dhara Ranasinghe
LONDON, Nov 6 (Reuters) - The dollar held its ground against
other major currencies on Wednesday, supported by rising hopes
for a U.S.-China trade deal and an improving outlook for the
U.S. economy.
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 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.
"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 in London.
"A lot of good news was built into the price and unless we
get something more, a little bit of disappointment will come
through."
The dollar index, which measures the dollar's value against
other major currencies .DXY was just 0.1% lower at 97.876 in
early European trade after rising 0.4% the previous day.
The euro stood at $1.1077 EUR= , having dropped 0.5% on
Tuesday, and was not far from a near three-week low of $1.10635
hit that session.
Against the yen, the dollar was a touch softer on the day at
109.00 yen JPY= , but not far from its October high of 109.285.
The Swiss franc CHF= changed hands at 0.9928 to the dollar
following its 0.5% fall the previous day.
Analysts said that better-than-expected U.S. economic data
in the past week had also eased expectations for further easing
from the U.S. Federal Reserve - a positive development for the
greenback.
A survey on 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 malaise in
trade war-hit manufacturers was infecting the service sector,
too. That followed a strong a U.S. employment report on Friday.
"On top of Sino-U.S. trade issues, the market is reacting to
signs of U.S. economic strength at the moment," said Kyosuke
Suzuki, director of foreign exchange at Societe Generale.
The positive mood spilled over to the risk-sensitive
Australian dollar, which changed hands at $0.6893 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 2.9% from its record low in the
offshore trade marked in early September.