FOREX-Dollar softens as dealers await trade news, eye political turmoil

* Dollar softens but remains strong in sideways trade
* Euro lifts from fresh two-year low, yen stronger
* Greenback still near multi-week highs vs most major
currencies
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook
SINGAPORE, Sept 27 (Reuters) - The dollar softened on
Friday, drifting from multi-week highs against most major
currencies as investors cautiously weighed fresh political
turmoil in the United States and waited for the next turn in
trade negotiations with China.
The greenback was marginally weaker against the safe-haven
yen JPY= , which traded at 107.70 per dollar, and retreated
from a two-year peak touched in Asian morning trade against the
euro to steady around $1.0921 EUR= .
It fell against the trade-sensitive Australian and New
Zealand dollars, which gently rallied on hopes that next month's
U.S.-China trade talks will bring progress. Moves were slight,
though and neither strayed far from two-week troughs against the
greenback.
"A one word description of currency markets trading today:
moribund," said markets strategist Michael McCarthy on the phone
from brokerage CMC Markets in Sydney.
"I think what some traders are responding to is the lack of
news. It's becoming apparent that if a (U.S.-China trade) deal
is to be done here, it's going to be done behind closed doors.
It won't be done over Twitter or in the headlines. We're looking
to next week."
China's top diplomat said China was willing to buy more U.S.
products. CNBC reported that trade war talks were on track and
scheduled for Oct. 10-11 in Washington, citing people familiar
with the arrangements. The pound edged higher to $1.2330, having hit a two-week low
on Thursday after the European Union's Brexit negotiator said
Britain had yet to provide "legal and operational" proposals for
an agreement on exiting the bloc.
Markets are also digesting the impeachment probe launched
into U.S. President Donald Trump.
A whistleblower report released on Thursday said Trump not
only abused his office in attempting to solicit Ukraine's
interference in the 2020 U.S. election, but the White House
tried to "lock down" evidence about it. Trump went on the offensive, branding the probe "another
witch hunt". "The positive U.S. dollar trend, with lots of noise in
between it, remains intact," said Westpac analyst Imre Speizer
in Auckland.
The dollar index .DXY , which measures the greenback
against a basket of other currencies, is on track for its best
week in a month. It was flat near a three-week high on Friday at
99.146.
The Chinese yuan CNY= eased to 7.1327 per dollar as weak
domestic demand and the trade war pushed industrial profits
lower. The Australian dollar AUD=D3 rose to $0.6758, but gains
were capped as traders wait for a central bank meeting next
Tuesday where the Reserve Bank of Australia is widely expected
to cut interest rates.
"It seems that when push comes to shove, the USD remains the
safest place to be at the moment," said Rodrigo Catril, senior
FX analyst at National Australia Bank in Sydney.
"In addition to its prime reserve currency status, the
greenback is still benefiting from a yield supremacy and a U.S.
economy that is still performing relatively well."

(Editing by Jacqueline Wong and Lincoln Feast.)