By Tom Westbrook
SINGAPORE (Reuters) - The euro nursed losses on Tuesday after weak readings on German manufacturing rattled confidence, while the dollar found broad support as investors looked for signs of progress from Sino-U.S. trade negotiations.
The single currency (EUR=) shed 0.2% overnight after a survey showed European business activity stalling, and in fact going backwards in powerhouse Germany where a manufacturing recession deepened.
It held around $1.0990 in Asian hours, while the dollar edged higher against the Japanese yen to buy 107.58 yen and held its ground on the Australian and New Zealand dollars.
Against a basket of currencies (DXY), the dollar edged higher to 98.621.
"The U.S. dollar is rising by default rather than anything U.S.-specific," said Michael McCarthy, chief market strategist at CMC Markets in Sydney, adding that volumes were low as traders mostly kept to the sidelines waiting for news.
"Trade is never far from the markets' radar, but I think currency markets are increasingly expecting (U.S-China tensions) to be protracted, I think optimism has dissipated."
The British pound wallowed at $1.2431, near a one-week low, ahead of a UK Supreme Court ruling due around 0930 GMT.
The court will rule on whether Prime Minister Boris Johnson acted unlawfully when he suspended parliament just weeks before Brexit, with the case's outcome potentially complicating his plans to lead his country out of the European Union next month.
The Australian and New Zealand dollars were steady ahead of a speech by Reserve Bank of Australia Governor Phil Lowe at 1005 GMT, with the market expecting a dovish tone after weak jobs data last week lifted expectations of an imminent rate cut.
Both currencies sat near three-week lows, with the Aussie buying $0.6772 and the kiwi $0.6290.
"We think Lowe will provide a strong signal that the RBA is ready to cut rates again, endorsing our view for a 25bp cut in October," said Tapas Strickland, a director of economics and markets at National Australia Bank in Sydney.
"Any comments on the scope for unconventional policy will also be critical for the market."
The Bank of Japan's governor Haruhiko Kuroda is also due to speak today, around 0530 GMT.
Meanwhile a delicate upbeat mood broadly held, with Chinese importers' decision to buy 10 boatloads of U.S. soybeans seen as a positive sign leading in to trade negotiations next month.
China's yuan strengthened very slightly to 7.1056 in offshore trade.
U.S. Treasury Secretary Steven Mnuchin told Fox Business that discussions were scheduled in two weeks and that he and U.S. Trade Representative Robert Lighthizer would meet Chinese Vice Premier Liu He.