1st LD Writethru: U.S. dollar lower on China's currency move

The U.S. dollar dropped against other major currencies on Wednesday as doubts over whether the Federal Reserve would raise interest rate in September increased following the sharp decline of Chinese yuan.

China's RMB extended its loss in value on Wednesday, a day after the central bank's decision to improve the yuan's central parity system that aims to better reflect its market exchange rate against the U.S. dollar.

The People's Bank of China (PBOC) cited a strong U.S. dollar and sharp appreciation in the RMB real effective exchange rate as key considerations behind the policy change.

Analysts said China's move cast uncertainties on the timing of the Fed's rate hike this year, and many investors think there is less chance of a September hike.

The dollar index, which measures the greenback against six major peers, fell 1.03 percent to 96.290 in late trading, its lowest level in about a month.

Investors were also awaiting the closely-watched U.S. retail sales data due to release on Thursday to get a more comprehensive view of the country's economic recovery.

In late New York trading, the euro rose to 1.1162 dollars from 1.1035 dollars in the previous session, and the British pound climbed to 1.5608 dollars from 1.5564 dollars in the previous session. The Australian dollar increased to 0.7374 dollar from 0. 7291 dollar.

The U.S. dollar bought 124.22 Japanese yen, lower than 125.15 yen of the previous session. The greenback declined to 0.9743 Swiss franc from 0.9892 Swiss franc, and inched down to 1.2994 Canadian dollars from 1.3124 Canadian dollars. Endite