The Australian dollar helped lead Group-of-10 currencies higher against the greenback as a stronger yuan offset the impact from China reporting a drop in consumer prices.
The Aussie climbed as much as 0.3% to 65.64 US cents after the People's Bank of China set the dollar-yuan rate at 548 pips below traders' estimate, signaling it's in no rush to withdraw support for the currency. China's state-owned banks were also seen selling dollars, according to Asia-based FX traders.
The Bloomberg Dollar Spot Index was down 0.1% while the yield on two-year Treasuries was little changed at 4.01%.
USD/JPY fell 0.1% to 143.18.
The Bank of Japan's looser grip on benchmark 10-year yields is starting to shake up the outlook for short-term borrowing costs, with swaps traders betting that the central bank will end the world's last negative interest rate policy in as little as eight months.
NZD/USD rose 0.2% to 0.6076.
Two-year inflation expectations rose to 2.83% for the third quarter from 2.79% prior.
Some information comes from FX traders familiar with the transactions who asked not to be identified because they aren't authorized to speak publicly.
Source: Bloomberg
