U.S. and China officials are reportedly working on a plan to hold talks to end a trade dispute between the two countries that would result in meetings between Trump and Xi at a summit in November, according to the Wall Street Journal.
A nine-member delegation from Beijing will hold meetings with U.S. officials on Aug. 22 and Aug. 23, the report said, citing officials from both countries. On Thursday, the two governments announced lower-level trade talks later this month aimed at resolving their escalating tariff war.
The news that the U.S. and China were reportedly drawing up plans to settle the ongoing trade dispute gave markets some reprieve and paused the dollar's appreciation, according to analysts.
"This has given markets some reason for optimism that a de-escalation of Sino-US trade tensions is possible one side or other of November's US mid-term elections," Ray Attrill, head of foreign exchange strategy at the National Australia Bank, said in a morning note.
In particular, the news resonated in the currency market where the Australian dollar and the New Zealand dollar saw "pronounced" gains, according to Attrill.
The U.S. dollar index, which tracks the greenback against a basket of currencies, traded at 96.230 as of 3:36 p.m. HK/SIN, compared to levels above 96.500 reached in the previous week.
DBS Bank analysts said in a morning note that the appreciation of the dollar paused ahead of the U.S.-China talks later this week.
"Washington officials, however, appear more interested in discussing the Chinese yuan's rapid depreciation in recent months while Beijing officials assess America's intentions to contain China," the analysts said.
The onshore yuan traded at 6.8511 to the dollar while the offshore yuan was at 6.8439 at 3:37 p.m. HK/SIN.
Among other currency pairs, the Japanese yen traded at 110.63 to the dollar at 3:37 p.m. HK/SIN, strengthening from levels above 110.8 last week. The Australian dollar traded at $0.7304 while the New Zealand dollar was at $0.6614.
— CNBC's John Schoen contributed to this report.