A trader at a Chinese lender in Shanghai said the market had already priced in a likely Federal Reserve rate cut late in the day, while the expectations for a breakthrough in trade talks were low. Any surprises on either front would therefore give the yuan some directional cues in the days ahead.

"Trading is calm...but if the results of the trade talks are better-than-expected, the yuan will likely strengthen," said a trader at a Chinese lender in Shanghai.

The spot market opened at 6.8850 per dollar and was changing hands at 6.8815 at midday. The People's Bank of

China set the midpoint rate at 6.8841 per dollar prior to market open, firmer than the previous fix of 6.8862.

Top U.S. and Chinese trade officials met in Shanghai on Wednesday for talks in a bid to end a year-long trade war, despite low expectations for progress and combative remarks from U.S. President Donald Trump.

Trump had said on Twitter that China appeared to be backing off on a pledge to buy U.S. farm goods and warned that any stalling in talks based on expectations Trump wouldn't win re-election in 2020 would lead to a worse outcome for Beijing.

"His criticism on China was nothing new, and market expectation for the latest round of China-US trade talks was mlow. Hence, the RMB market was largely muted with the headline," wrote Ken Cheung Kin Tai, Chief Asian FX Strategist at Mizuho Bank.

He also noted that impact from a likely 25-basis-point rate cut by the Fed has been fully priced in, and he expects China's central bank to follow with a symbolic, 5-basis-point reduction in seven-day reverse repo yield.

On the economic front, China's factory activity shrank for the third month in a row in July, an official survey showed, albeit at a slower pace than in June, which led some investors to see an improvement in sentiment following the China-U.S. trade ceasefire announced last month.

The market also drew some support from the Politburo meeting, which signaled greater efforts to boost demand and support the economy, but flagged the property market would not be used as a form of short-term stimulus.

That suggested stability will likely remain a priority for the PBoC, Mizuho's Cheung said.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 93.96, weaker than the previous day's 94.03.

The global dollar index rose to 98.069 from the previous close of 98.05.

The offshore yuan was trading 0.09 percent away from the onshore spot at 6.8876 per dollar.

Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.9287, -0.64 percent away from the midpoint.

One-year NDFs are settled against the midpoint, not the spot rate.