FOREX-Dollar softens on trade deal hopes; U.S. jobs data in focus

* Dollar under pressure as risk-sensitive currencies gain
* Trump said to have asked to prepare trade deal draft
* Ebb in trade woes weighs on yen, lifts Aussie and yuan
* Traders awaits U.S. jobs data for potential lift
* Graphic: World FX rates in 2018

By Tom Finn

LONDON, Nov 2 (Reuters) - The dollar fell on Friday on signsU.S. President Donald Trump is seeking to resolve a damagingtrade war with China.

The conflict between the world's two largest economies hascast a pall over the global economy and boosted safe-havendemand for the greenback this year.

But the dollar sank to a seven-day low on Friday afterBloomberg reported that Trump had asked U.S. officials to begindrafting a possible trade deal with Beijing. Currencies hit hard by recent dollar buying including theeuro, the Norwegian and Swedish crowns and Australian and NewZealand dollars climbed higher.

Analysts said the start of November had seen a flood ofend-of-month buying of dollars cease and a more positive moodfor risk-taking pervade markets after a brutal month for stocks.

"Either Trump is paving the way for a trade deal later thismonth, or he's cynically driving up equity indices ahead of U.S.mid-term elections," said Kit Juckes, a strategist at SocieteGenerale.

"What's for sure, is that talk of a trade deal has addedfurther juice to the last few day's risk appetite, weakening thedollar."

The dollar index, which measures the greenback'svalue versus six major peers, moved lower by 0.2 percent to96.101 after dropping nearly 0.9 percent overnight.

The Australian dollar , which is sensitive toChinese economic developments, rose half a percent to $0.72500.The Aussie had jumped 1.8 percent on Thursday on increasingconfidence U.S.-China ties were improving.

Both the euro and the British pound rose0.3 percent against the dollar.

The pound jumped on Thursday after the Bank of England keptinterest rates steady and hinted at slightly faster future raterises if Brexit goes smoothly.

Market participants were awaiting the U.S. jobs report dueat 1230 GMT for clues on the pace of further interest rate risesin the United States.

"The relatively cheap dollar, might attract buyers if theoverall jobs report is robust," said David Madden, a strategistat CMC Markets.

U.S. payroll figures are expected to have risen 190,000 inOctober, from a 134,000 increase in the previous month.

With investor risk sentiment improving, emerging marketcurrencies made gains versus the dollar.

China's yuan rose about 0.2 percent to a three-week high of6.8970 in offshore trade after gaining 0.8 percent onThursday.

Worries about Chinese economic growth and the trade row hadpushed the offshore yuan to a 22-month trough of 6.9800 midweek.

Despite the dollar's slide, some analysts were cautiousabout further falls given the headwinds for the global economy.

"With the combination of ongoing overhang of trade wars, thetightening Fed and the U.S. economy outperforming its G10 peers,we don't expect such across-the-board EM FX rallies vs USD to belong-lasting," ING analysts said in a note to clients.

(Reporting by Tom FinnEditing by Alexander Smith) Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.