NEW YORK: The dollar fell on Friday on improving risk sentiment on news that U.S. President Joe Biden and Chinese leader Xi Jinping spoke for the first time in seven months.

In a statement, the White House said Biden and Xi had “a broad, strategic discussion,” including areas where interests and values converge and diverge. The conversation focused on economic issues, climate change and COVID-19, a senior U.S. official told reporters.

The dollar dipped 0.35% to 6.4265 yuan, nearing a more than two-month low of 6.4233 yuan reached last week.

The Australian dollar gained 0.41% to $0.7397 and the New Zealand dollar rose 0.56% to $0.7145.

The dollar index fell 0.07% to 92.459.

The greenback has fallen from a nine-month high in August as investors wait on new clues on when the Federal Reserve is likely to begin paring its bond purchases and, eventually, raise rates.

“That to me is the most important thing, is when does the Fed hike rates, and unfortunately we may not know that for a little while,” said Erik Nelson, a macro strategist at Wells Fargo in New York.

Fed officials are grappling with rising price pressures while jobs growth remains below their targets.

The dollar pared losses after data on Friday showed that U.S. producer prices increased solidly in August, indicating that high inflation is likely to persist for a while, with supply chains remaining tight as the COVID-19 pandemic drags on.

It comes after employment data for August released last week showed that U.S. jobs growth slowed, while wage inflation rose more than expected.

The Wall Street Journal on Friday wrote that Fed officials will seek to make an agreement at the Fed’s September meeting to begin paring bond purchases in November.

The euro was largely unchanged at $1.1826 on Friday, a day after the European Central Bank said it will trim emergency bond purchases over the coming quarter. The greenback gained 0.10% to 109.91 against the safe haven Japanese yen.