Investing.com - The dollar remained near session lows against its rivals Wednesday on reports that the U.S. and China would restart trade negotiations, while weaker U.S. wholesale inflation also weighed.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.24% to 94.82, to remain near session lows of 94.72.
U.S. Treasury Secretary Steven Mnuchin sent a letter to Chinese officials to propose trade talks in the next few weeks, The Wall Street Journal reported.
The talks would take place before the Trump administration implements additional tariffs on Chinese imports, according to the report.
The news drew a brief retreat in the dollar as traders reined in their bets on a full-blown U.S.-China trade war, which had supported demand for greenback on expectations the United States would fare better than its rivals.
Optimism for an improvement to U.S.-China trade relations comes just a day after the China told the World Trade Organization (WTO) it wants to impose $7 billion a year in sanctions on the United States, citing Washington’s non-compliance with a ruling in a dispute over U.S. dumping duties.
Ahead of consumer inflation data due Thursday, wholesale inflation for August undershot expectations.
The Labor Department said on Wednesday its producer price index for final demand fell 0.1% last month, missing economists' forecast for a 0.2% rise. In the 12 months through August, the producer price index rose 2.8%.
Analysts blamed the sluggish wholesale inflation on falling input prices in the volatile trade-services sector, but said the overall trend remained intact.
"Goods prices were flat, but the miss came in large part from services, specifically a 0.9% drop in the volatile trade-services sector, which measures margins, not selling prices," Wells Fargo said. "Core was softer as transportation and warehousing prices fell, yet the trend remains upward."
The dollar was also hit by a firmer Canadian dollar amid rising oil prices and on optimism that the U.S. and Canada will reach an agreement on a revamp of the North American Free Trade Agreement (NAFTA).
USD/CAD fell 0.58% to $1.2993.
The pound and euro, meanwhile, traded largely flat against the dollar as both the European Central Bank and Bank of England are expected to stand pat on interest rates Thursday.
GBP/USD rose 0.02% to $1.3036, while EUR/USD rose 0.19% to $1.1628.
Elsewhere, the risk-sensitive USD/JPY fell 0.27% to Y111.34.