During U.S. morning trade, the dollar erased gains against the euro, withEUR/USD edging up 0.06% to 1.3268, after falling to lows of 1.3239.
The Department of Labor said producer prices were flat last month, confounding expectations for a 0.3% increase after a 0.8% increase in June.
The core producer price index eased up 0.1% in July, missing forecasts for a 0.2% increase.
The disappointing data raised fresh doubts over whether the economic recovery is strong enough for the Fed to begin unwinding its USD85 billion-a-month asset purchase program later this year.
The euro slipped lower against the dollar earlier in the session in spite of data showing that the euro zone economy returned to growth in the second quarter, emerging from an 18-month recession.
Eurostat said the bloc’s economy expanded by 0.3% in the three months to June. Economists had expected quarter-on-quarter growth of 0.2%. It was the fastest quarterly expansion since the first quarter of 2011.
France’s economy expanded 0.5% in the three months to June, following two consecutive quarters of contraction, while Germany’s economy expanded by a larger
The dollar fell to session lows against the yen, with USD/JPY down 0.27% to 97.94.
The dollar also fell to session lows against the pound, with GBP/USDrising 0.55% to 1.5534.
Sterling was boosted after Bank of England minutes showed that policymakers were divided on forward guidance and a separate report showed that the U.K. unemployment rate was unchanged in June.
The Office of National Statistics said the U.K. unemployment rate remained unchanged at 7.8% in June, in line with expectations. The number of people claiming unemployment benefits fell by 29,200 in July, better than expectations for a decline of 15,000.
Separately, the minutes of the BoE’s July meeting showed that the decision to provide forward guidance on future rate increases was not unanimous.
Monetary Policy Committee member Martin Weale wanted tougher measures to ensure that the pledge to hold rates at record lows did not lead to an uptick in inflation, but said he accepted the principles of forward guidance.
The dollar trimmed gains against the Swiss franc, with USD/CHF up just 0.09% to 0.9340.
The greenback was broadly lower against its Australian, New Zealand and Canadian counterparts, with AUD/USD gaining 0.43% to trade at 0.9150, NZD/USD advancing 0.93% to 0.8037 and USD/CAD down 0.18% to 1.0324.
In New Zealand, official data on Wednesday showed that retail sales rose 1.7% in the second quarter, better than expectations for a 1.4% increase, while core retail sales rose by a larger-than-forecast 2.3%.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was 0.12% lower at 81.69.
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