LONDON: The dollar languished near two-weeks low against a basket of currencies on Wednesday as trade war fears faded and markets awaited key US inflation data to set the greenback's near-term direction.
The dollar index versus a basket of six major peers was down 0.1 percent at 89.472, trading within sight of a low of 89.251 set on March 28.
Chinese President Xi Jinping on Tuesday promised to open the country's economy further and lower import tariffs on products including cars.
Xi's comments allayed fears of a trade war between China and the United States and restored some appetite for risk among investors in commodity currencies and emerging markets.
But opinions differ on whether a full-blown trade dispute has been averted.
"The risk of a full-blown trade war... poses the most serious risk to continued strong global momentum. However, the likelihood that the current tit-for-tat threats escalate to such an extent seems low," said Kallum Pickering, a senior economist at Berenberg.
Other analysts said there had been little change in rhetoric and that risks remained.
"What President Xi actually said wasn't much different to previous speeches he has made in the past, which means that eventually these words will need to be turned into actions," said CMC Markets' Michael Hewson in a note.
The dollar fell 0.2 percent to trade at 107.035 yen, a safe haven currency of choice for many who believe it would benefit most during a trade war.
In the US, investors were awaiting inflation data due later in the session. Analysts polled by Reuters forecast that the core consumer price index (CPI) would be unchanged year-on-year in March, after a 0.2 percent rise in February.
The euro gained 0.2 percent at $1.2383, its strongest level since March 28.
The common currency received a boost on Tuesday after European Central Bank policymaker Ewald Nowotny said the ECB's bond buying programme would be wound down by the end of this year, paving the way for the bank's first rate rise since 2011.
But the euro lost some gains an ECB spokesman subsequently said Nowotny's view of the future path of ECB rates did not represent those of the bank's rate setting body.
The rouble took another leg down on Wednesday, falling more than 1 percent against the dollar taking its losses so far this week to nearly 12 percent as markets reeled from the latest US sanctions.
Turkey's lira sank to a fresh record low against the dollar as investors worried about the outlook on monetary policy.
The Canadian dollar CAD=D3 stood at C$1.260` per US dollar. On Tuesday it had set a seven-week high of C$1.2588, helped by higher oil prices and the easing concerns about the US-China trade row.
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