Dollar little changed in Europe

The dollar was little changed on Friday with currencies trading in tight ranges after mixed messages from China about the trade war gave risk appetite only a limited boost, while the euro touched weekly lows on inflation data.

Against a basket of currencies, the dollar hovered around zero, heading for its smallest weekly change since the start of August this year.

MUFG currency analyst Lee Hardman wrote in a note that low volatility and tight trading ranges are currently the key characteristics of the FX market.

Volatility for major currencies has rarely been lower.

The Swiss franc was down around 0.1% against both the dollar and the euro, suggesting market optimism as the Swiss franc is perceived as a safe-haven currency.

The Japanese yen - also seen as a safe haven - was up less than 0.1% against the dollar.

But the trade-exposed New Zealand dollar was up 0.2% against the US dollar and the Australian dollar also lifted slightly.

The euro, which had been up as much as 0.3% versus the dollar in early London trading, turned negative and touched a weekly low after euro zone flash PMI data fell short of expectations.

It was last at zero net change against the dollar, at $1.10585.

Markets were unmoved by Christine Lagarde's first policy speech as president of the European Central Bank.

German third quarter GDP data held no surprises, showing that exports, state spending and consumers helped the German economy avoid a recession.

"Unless global uncertainties are lifted, which are weighing down on the manufacturing sector, it is only a question of when, not if, the weakness in manufacturing spreads to the rest of the economy," Daria Parkhomenko, forex strategy associate at RBC Capital Markets, wrote in a note to clients.

Chinese President Xi Jinping said Beijing wants to work out a deal with Washington and has been trying to avoid a trade war - but is not afraid to retaliate when necessary.

The Chinese president called for strengthened communication with the United States.

A senior Chinese diplomat urged the United States to compromise in order to develop stable relations between the countries, saying that some US politicians were trying to push the countries into confrontation.

After a week of mixed signals over the likelihood of a preliminary trade deal, the latest developments did little to move markets.

"While there are many trade headlines over the past few days, one can also argue that this is actually a 'status quo'," Commerzbank FX and EM analyst Hao Zhou wrote in a note to clients.

"At the end of the day, there is little progress on trade talks, and it looks like both sides are fine with another delay of the phase 1 deal."