The U.S. dollar gained back some ground on Thursday after China's central bank said there was no basis for further depreciation of the yuan, refocusing attention on the likelihood of a Federal Reserve interest rate increase in September.
After falling to roughly a one-month low on Wednesday, the U.S. dollar rose against a basket of major currencies as the yuan's decline slowed, easing worries that China's decision to devalue its currency was a deliberate attempt to gain a competitive advantage.
The People's Bank of China (PBOC) also said it would step in to stabilize prices. The statements helped alleviate concerns of a currency war.
"With the suggestion that the PBOC's currency adjustment is mostly complete at this point right now, one has to think that a September Fed hike is still on the table," said Mazen Issa, senior currency strategist at TD Securities in New York.