FOREX-Dollar holds recent gains as hopes rise for U.S.-China trade truce

* Media report says U.S., China have agreed to tentative
truce
* Dollar rises as safe havens weaken, yen loses 0.3%
* Euro trades around $1.1365
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds new quotes, details, latest prices)
By Tommy Wilkes
LONDON, June 27 (Reuters) - The dollar held on to gains made
in its recovery from recent lows on Thursday on hopes that the
United States and China will agree to a trade truce before a G20
summit this weekend, although investor sentiment remained
fragile.
The two countries have agreed to a tentative truce in their
trade dispute, Hong Kong's South China Morning Post cited
sources as saying, ahead of U.S. President Donald Trump and
Chinese President Xi Jinping's meeting on Saturday. That supported buying of the dollar, which had weakened in
recent weeks on expectations the Federal Reserve would cut
interest rates and buying of safe-haven currencies such as the
Japanese yen by investors worried about the trade conflict.
A dollar index rose 0.1% against a basket of currencies to
96.351 .DXY before steadying at 96.222.
The dollar rose to as high as $1.1347 earlier but was flat
on the day at $1.1367 EUR=EBS by 1030 GMT.
Euro zone economic sentiment dropped to its lowest point in
nearly three years in June, European Commission data showed,
although the single currency was unmoved. "Economic data has continued (and will continue) to take a
back seat to G20 headlines, though it's probably the case that
an increase in (June) German CPI inflation was offset by weaker
economic and business confidence surveys in terms of the general
EUR impact this morning," said BMO Capital Markets' European
Head of FX Strategy, Stephen Gallo.
The yen, which had jumped to five-month highs earlier this
week, fell to 108.16 JPY=EBS but later stabilised around
107.87. The Swiss franc was unchanged at 1.1117 francs per euro
EURCHF=EBS .
China's offshore yuan rose 0.1% to 6.8802 yuan per dollar
CNH=EBS , helping the renminbi back towards a six-week high of
6.8370 yuan per dollar touched last week.
The outcome of the Group of 20 summit will likely weigh on
the policy plans of the Fed, which opened the door to possible
rate cuts after last week's meeting as it tries to address any
economic damage stemming from the trade conflict.
The Fed also faces pressure from Trump to lower rates at a
time when the president has attacked European Central Bank plans
to inject more stimulus and possibly ease policy.
"I do not see a good reason for risk-on in this environment,
but perhaps that is my biased German perspective. It seems
unlikely to me that in this environment EUR-USD would gather
sufficient momentum to test the $1.14 mark again before Osaka,"
Commerzbank analysts said in a research note sent to clients.
Elsewhere, sterling rose 0.2% to $1.2714 GBP=D3 after
Boris Johnson, the frontrunner to replace Theresa May as British
prime minister, said that the chance of a no-deal Brexit was "a
million-to-one".