Greenback's earlier gains retreat after PPI; U.S. consumer sentiment report on tap

The dollar pulled back from gains to trade flat after the release of data indicating a pickup in inflation.

Markets now turned their attention back to bets on Fed rate hike, as the recent reports showed that more signs of economic growth and inflation, two factors that could encourage the central bank to act.

U.S. producer price inflation (PPI) in May climbed by a seasonally adjusted 0.5%, spurred by an uptick in gasoline prices.

The reading was the largest since September 2012, and was in line with most analysts' estimates, however prices remain 1.1% lower over the past 12 months.

The dollar slightly declined after the report. Investors will now await the release of a U.S. consumer sentiment report later in the day.

In Europe, yields on German government bonds were marginally lower, which supported the dollar against the euro, analysts said.

EUR/USD retreated 0.28% to trade at 1.1228.

GBP/USD lost 0.18% to settle at 1.5490.

The greenback added 0.23% vs yen with USD/JPY trading at 123.71.