* Dollar index steady after coming off four-week low
* Investors await developments in China-U.S. trade dispute for trading cues
By Daniel Leussink
TOKYO, Aug 29 (Reuters) - The dollar inched higher on Wednesday, sticking to a tight range after touching a four-week low overnight as optimism over the U.S.-Mexico trade deal gave way to caution ahead of an upcoming deadline in the China-U.S. trade dispute.
The dollar index against a basket of six major currencies stood little changed at 94.772 as of 0056 GMT, after trading as low as 94.434 during the U.S. session, its lowest since July 31.
After dipping to its four-week low, the greenback made up losses as the U.S. consumer confidence index came in higher than expected, reaching its highest level since October 2000.
Minori Uchida, chief currency strategist at MUFG Bank in Tokyo, said investors awaited developments in the China-U.S. trade dispute for trading cues.
The deadline for public comment on U.S. President Donald Trump’s increased tariffs on $200 billion of Chinese goods was on Sept. 5.
“End-of-month flows could start to take hold into the end of the week, and combined with light news flow and the risk of impending trade war escalation could result in conviction remaining light,” JPMorgan analysts said in a note.
The United States and Mexico agreed earlier this week to overhaul NAFTA, putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-country pact.
Uchida said the dollar’s recent slide has been capped by a positive mood on U.S. stock markets.
“The dollar has correlated strongly with stocks compared to interest rates. As long as stocks are performing well. I don’t think the dollar is going to decline so much,” he said.
On Wednesday, the U.S. currency was nearly flat at 111.20 yen following a gain of about 0.1 percent on Tuesday.
The euro edged less than 0.1 percent lower to $1.1686 after rising against the greenback during the previous three sessions, despite concerns over Italy where political uncertainty pushed up bond yields toward three-month highs.
The Australian dollar rose about 0.1 percent to $0.7346, after losing about 0.1 percent on Tuesday. (Reporting by Daniel Leussink Editing by Darren Schuettler)