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Investing.com - The U.S. dollar slipped slightly Wednesday, as traders waited for more concrete news to come out of the trade talks between China and the U.S., ahead of the release of key inflation data.
At 04:35 ET (08:35 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, dropped 0.1% to 99.032.
Trade framework lacks detail
U.S. and Chinese officials have concluded two days of intensive negotiations in London, agreeing to a high‑level framework intended to revive the Geneva truce and address export control disputes.
Speaking at the end of two marathon days of discussions, U.S. Commerce Secretary Howard Lutnick said the agreement will put "meat on the bones" on a prior deal struck in Geneva last month -- which, despite easing some fears over an intensifying trade conflict between the world’s two largest economies, has shown signs of fragility.
Lutnick said there was a resolution to a Chinese move to cut off access to a handful of metals crucial for American industry and the U.S. military, but Tuesday’s announcement was largely short of particulars and will now need to be approved by U.S. President Donald Trump and Chinese counterpart Xi Jinping.
"The Sino-American trade negotiations in London have yielded plans to revive the flow of sensitive goods, but have failed to mark a breakthrough and leave the dollar still vulnerable to domestic fiscal concerns," analysts at ING said in a note to clients.
These concerns include the threat of stagflation as any newly agreed tariffs would be higher than they were late last year, potentially weighing on economic growth while lifting domestic prices.
With this in mind, traders await the release of the May consumer price index later in the session, which is tipped to speed up slightly to 2.5% from 2.3% on an annual basis, while the month-on-month gauge is expected to match April’s pace of 0.2%.
Stripping out more volatile items like food and fuel, the index is seen edging up to 2.9% year-over year and 0.3% on a monthly basis.
Sterling awaits Spending Review
In Europe, EUR/USD traded largely flat at 1.1425, with little in the way of economic data to move the single currency Wednesday.
European Central Bank President Christine Lagarde, speaking on a rare visit to Beijing, said on Wednesday all countries needed to take responsibility and should tweak policies that have led to either excess supply or excess demand, otherwise trade barriers and their likely retaliation will erode global prosperity.
“EUR/USD’s direction today will be mostly set by the dollar, with some support likely near 1.1400 and a possible push above 1.1500 by the week’s end,” ING said.
GBP/USD slipped 0.1% to 1.3493 ahead of a Spending Review by U.K. Chancellor Rachel Reeves later in the session, detailing the public spending for government departments from 2026 to 2029.
““Today’s Spending Review shouldn’t be a big moment for financial markets,” said ING. “We already know how quickly investment and departmental budgets will rise over the next few years, and today’s announcement simply tells us how the overall pot gets divvied up.”
Yen/yuan range bound
In Asia, USD/JPY traded 0.1% higher to 145.07, while USD/CNY slipped slightly lower to 7.1856, as traders tried to digest the U.S.-China trade framework agreed in London.
The proposed agreement remains pending formal approval from Presidents Donald Trump and Xi Jinping, and failed to include concrete details on tariff reductions.