* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Focus shifts to U.S.-China at G20
* Some optimism on deal to avert trade war escalation
* Euro on holding pattern before consumer price data (Adds strategist's quote, details on Australian dollar)
By Stanley White
TOKYO, June 28 (Reuters) - The dollar trod water early on Friday as investors awaited a crucial meeting between the leaders of the United States and China at a Group of 20 summit over the weekend for any signs of progress to end their heated trade war.
The mood improved the previous day after the South China Morning Post said Washington and Beijing were laying out an agreement that would help avert the next round of tariffs on an additional $300 billion of Chinese imports.
Negotiations between the world's two largest economies have been fraught, so traders and analysts caution that a resolution at the G20 summit is far from certain. Yet, markets seem to be clinging on to hopes of progress in a meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the G20 in the western Japanese city of Osaka.
Trump is set to hold the much-anticipated trade talks with Xi at 11:30 a.m. (0230 GMT) on Saturday.
"The minimum to keep markets where they're at now is for the United States and China to agree to keep talking and buy some time," said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management Co.
"Markets are doubtful the leaders of (the United States and China) can reach a full agreement."
The dollar traded at 107.66 yen, little changed on the day but on course for a 0.3% gain this week as the greenback mounted a recovery from a five-month low of 106.77 yen reached on Tuesday.
The dollar index, which measures the U.S. currency against six of its peers, was at 96.217, unchanged on the week.
The United States and China have already imposed tariffs of up to 25% on hundreds of billions of dollars of each other's goods in a dispute about China's trade practices that has lasted nearly a year.
The drawn out trade war has slowed global growth and pushed many central banks toward cutting interest rates to support their economies. Any sign the trade war will come to an end would be a significant boost for the global economic outlook.
"Market moves show there is less concern about the U.S.-China meeting, but the results of the meeting have to match these expectations for the dollar and risk assets to go higher," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities.