The United States and China have largely agreed on a mechanism to police any trade agreement they reach, including establishing new "enforcement offices," US Treasury Secretary Steven Mnuchin said on Wednesday.

But the official did not say when or if US tariffs on $250 billion worth of Chinese goods would be removed, and declined to put a timeframe on the negotiations.

Trade uncertainty hanging over the yuan has dampened trading activity, with the weekly trading volume at $96.45 billion as of midday on Thursday, compared with $126.8 billion for the whole of last week and about $164.6 billion the week before.

"The market has digested much of the progress from trade talks before this week," said a trader at a foreign bank in Shanghai. "There are not a lot of events now that can move the exchange rate in either direction."

Spot yuan was changing hands at 6.7151 per dollar at midday, just 7 pips firmer than the previous late session close and 0.09 percent softer than the midpoint. The People's Bank of China set the midpoint rate at 6.7088 prior to the open, firmer than the previous fix of 6.7110.

Investors took in their stride Thursday's China price data that has helped ease deflation concerns. Factory-gate inflation picked up for the first time in nine months in March, while consumer inflation jumped to the highest since October 2018.

With little news from the trade talks, the yuan "may follow the US dollar a bit," said a second Shanghai-based trader, who sees the yuan trading between 6.70 and 6.74 in the short run.

"But even the dollar is lacking a clear direction," he added, noting that it has stayed relatively strong despite recent volatility.

The global dollar index held near two-week lows on Thursday as Federal Reserve minutes reinforced dovish policy expectations. It stood at 96.932 as of midday.

In the medium term, improving economic data should be supportive for the yuan, said Carie Li, Hong Kong-based economist at OCBC Wing Hang Bank.

"The PBOC may not have to loosen as much, and as the Fed holds, the US-China interest rate differential may not narrow as people previously thought," she said.

The offshore yuan was trading 0.07 percent weaker than the onshore spot at 6.7199 per dollar.