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The U.S. dollar exhibited weakness on Wednesday as the U.S. said the 25% tariffs on Chinese goods worth $250 billion imported into U.S. will remain in place until past the 2020 election in The U.S.
The dollar was weak against most major currencies, although the downside was not any significantly pronounced.
The dollar index, which dropped to a low of 97.16 midway through the day, later recovered to 97.24, but was still down in negative territory, trailing its previous close by about 0.14%.
Against the Euro, the dollar weakened to $1.1150, from $1.1128 late Tuesday. Eurozone industrial production grew for the first time in three months in November, data from Eurostat showed. Industrial production grew 0.2% on month, in contrast to a 0.9% fall in October. Nonetheless, this was slower than the 0.3% rise economists had forecast.
The Pound Sterling was gaining about 0.13% against the dollar at $1.3034. Pound was weak as Bank of England policymaker Michael Saunders joined his peers in supporting a potential interest rate reduction and as U.K. inflation eased to its lowest since November 2016 ahead of the interest rate-setting meeting this month.
Data from the Office for National Statistics showed that UK consumer price inflation eased to a three-year low of 1.3% in December, from 1.5% a month earlier.
Against the Japanese currency Yen, the dollar was down marginally at 109.90 yen, compareed to 109.99 yen a dollar on Tuesday.
The dollar was down slightly against the Aussie. The Aussie-Dollar pair was last seen quoting at 0.6904.
The dollar was weak against the loonie and Swiss franc as well, at 1.3045 and 0.9641, respectively.
In U.S. economic news, data released by the Labor Department said the producer price index for final demand inched up by 0.1% in December after coming in unchanged in November. Economists had expected prices to rise by 0.2%.
Excluding food and energy prices, core producer prices still crept up by 0.1% in December after dipping by 0.2% in November. Core prices were also expected to increase by 0.2%.
Meanwhile, a report from the Federal Reserve Bank of New York showed a modest acceleration in the pace of growth in regional manufacturing activity in the month of January.
On the trade front, the U.S. and China officially signed an historic phase one trade deal Wednesday afternoon in an effort to defuse the bitter trade dispute between the two economic superpowers.
President Donald Trump signed the agreement along with Chinese Vice Premier Liu He, Beijing's chief trade negotiator, in a ceremony at the White House.
The deal calls for China to purchase $200 billion worth of U.S. goods over the next two years, including up to $50 billion worth of agricultural products. It also purportedly addresses issues such as China's intellectual property theft, forced technology transfers and currency manipulation.
In exchange, the U.S. will scrap a new round of tariffs and cut tariffs on approximately $120 billion worth of Chinese goods in half to 7.5%.
Trump noted a 25% tariff on $250 billion worth of Chinese imports will remain in place in order to give the U.S. leverage as the two countries enter into phase two negotiations.
"We're leaving tariffs on, but I will agree to take those tariffs off if we are able to do phase two. In other words, we're negotiating with the tariffs," Trump said.
