* Currency markets wait cautiously for the G20 meet
* Dollar likely to weaken on easing U.S-Sino trade tensions
* Euro hovers near 1.14 mark
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Vatsal Srivastava
SINGAPORE, Nov 30 (Reuters) - The dollar was on tenterhooks Friday before a meeting of U.S. and Chinese leaders to discuss contention trade issues that might provide a catalyst for the near term direction of riskier assets such as stocks and safe havens including the greenback and the yen.
The U.S. currency has been shaken up this week on growing expectations that the Federal Reserve would slow down its rate hikes, a view given credence in comments on Wednesday by Chairman Jerome Powell.
Yet, the dollar has managed to staunch any large scale sell-offs, in part helped by a strong U.S. economy as well as a safety bid driven by Sino-U.S. trade tensions and receding growth momentum overseas.
It held steady in early Asian trade, with an index measuring its value versus six peers up marginally at 96.77.
The focus is now on a planned meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires between Nov. 30-Dec. 1.
With contentious trade and other topics expected to be taken up for discussions, markets remain nervous as Trump sent mixed signals on Thursday about the prospects for a trade deal with Beijing.
“If we see a truce, the Aussie and kiwi dollar will perform exceptionally well. We see a lot of upside in crosses such as Aussie/yen which would benefit from a risk on move,” said Nick Twidale, chief operation officer, Rakuten Securities.
“If tariffs on Chinese imports stay at 10 percent, the dollar is likely to weaken in a risk-on move,” he said.
Trump has said he plans to significantly hike the existing 10 percent tariffs on Chinese imports by January next year, which would sharply escalate the trade war between the economic heavyweights.
China’s economy is already under pressure, with a survey earlier on Friday showing its vast manufacturing sector growth stalled for the first time in over two years in November as new orders shrank.
Dollar investors were also carefully watching for any changes in U.S. monetary policy.
Overnight, minutes from the Fed’s Nov. 7-8 meeting indicated that another interest rate hike is warranted. But Fed officials also kept the debate open on when the U.S. central bank might pause its monetary tightening and how it would relay those plans to the public.
The Fed is widely expected to raise interest rates by 25 basis points in December, which would be the fourth hike for the year.
For 2019, the market is now pricing only one rate hike, according to the CME Group’s FedWatch Tool, below Fed’s projection of three increases during the year.
On Wednesday, Powell said the Fed’s policy rate is now “just below” estimates of a neutral rate, which investors interpreted as a signal the Fed’s three-year tightening cycle is drawing to a close.
“The Fed has basically acknowledged that if things go really sour, they are prepared to pause on their monetary tightening path,” Twidale said.
The yen was quoted at 113.41, up a touch versus the dollar. Analysts expect the dollar/yen to remain in an uptrend due to the diverging monetary policies of the Fed and the Bank of Japan.
The euro was steady at $1.1390, having risen in the last two sessions as the dollar wobbled on Powell’s comments.
Elsewhere, sterling traded at $1.2779, losing 0.1 percent versus the greenback. Traders remain bearish on the pound betting that British Prime Minister Theresa May will fail to win approval for her Brexit deal in a fractious parliament.
The Australian dollar lost 0.08 percent to $0.7315 on the weak Chinese PMI data. (Reporting by Vatsal Srivastava Editing by Shri Navaratnam)