The South China Morning Post, citing unnamed sources familiar with the discussions, said no progress was made on key issues and China's lead negotiator, Vice Premier Liu He, planned leaving Washington a day early.
The safe-havens of the yen and Swiss franc each rose as much as 0.3% though some of the gains were soon retraced after CNBC said the White House was unaware of any plans by the Chinese delegation to leave early.
The yen last stood at 107.35 per dollar and the franc at 0.9936 per dollar. The euro nudged higher to $1.0988.
China's yuan dropped 0.4% to hit five-week low in offshore trade, before it too recovered.
The trade-sensitive Australian and New Zealand dollars hit week lows before turning flat. Against a basket of currencies the dollar <.DXY> fell 0.1% to 99.012.
The moves offered a preview of what to expect if the talks achieve little or nothing, said Joe Capurso, senior currency strategist at the Commonwealth Bank of Australia in Sydney.
"We don't see any easy route to an agreement so we can see this going on for quite some time," he said.
Markets have for weeks gyrated as the likelihood of a breakthrough at the talks has waxed and waned while signs of the toll that the Sino-U.S. trade dispute is taking on the global economy have growth in strength and number.
Optimism that some sort of partial agreement between the parties could be reached had rallied risk assets overnight, before the SCMP report quickly unwound most of the hopes.
"The markets still seem to be travelling with a glimmer of optimism," said Ray Attrill, head of FX strategy at National Australia Bank, with one possibility a deal that staves off U.S. tariff rises in return for agricultural purchases by China.
"But as things stand that looks like a little bit naively optimistic that that was going to be the result of this. We're back to saying that chances are no trade deal."
Tensions had flared leading in to the deputy-level discussions after U.S. imposed visa restrictions on Chinese officials and blacklisted some Chinese tech firms it believes are implicated in the poor treatment of Muslim minorities.
Surprised and upset by the blacklisting, China lowered expectations for progress from the talks, Chinese government officials told Reuters.
The SCMP report cited a source saying the talks had so far skirted some of the thorniest issues, including technology transfers and state subsidies in China.
Liu, who is scheduled to meet U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin later on Thursday, no longer plans to remain in the U.S. capital for meetings on Friday, the paper said.
The Chinese yuan fell as far as 7.1677 per dollar, its weakest since Sept. 4, before recovering in offshore trade.
The Australian dollar and New Zealand dollar each fell 0.1% to touch one-week lows, but then steadied with the Aussie last buying $0.6717 and the kiwi $0.6287.
The pound was flat after a rollercoaster overnight session where it leapt on reports of a breakthrough on the Irish backstop and then gave up the gains as hopes of progress on a key sticking point for a Brexit deal were dashed.
It steadied at $1.2214 per pound, not far above a one-month low.
(Reporting by Tom Westbrook; Editing by Lincoln Feast)
By Tom Westbrook
Stocks treated in this article : Euro / Japanese Yen (EUR/JPY)
, Euro / British Pound (EUR/GBP)
, US Dollar / Japanese Yen (USD/JPY)
, British Pound / Japanese Yen (GBP/JPY)
, Euro / Australian Dollar (EUR/AUD)
, Australian Dollar / Swiss Franc (AUD/CHF)
, Japanese Yen / Swiss Franc (JPY/CHF)
, New Zealand Dollar / Japanese Yen (NZD/JPY)
, British Pound / Australian Dollar (GBP/AUD)
, Australian Dollar / Canadian Dollar (AUD/CAD)
, US Dollar / Chinese Yuan Renminbi (USD/CNY)
, Australian Dollar / Japanese Yen (AUD/JPY)
, Canadian Dollar / Japanese Yen (CAD/JPY)
, Australian Dollar / New Zealand Dollar (AUD/NZD)
, Australian Dollar / US Dollar (AUD/USD)
, Commonwealth Bank of Australia
, National Australia Bank Limited
, United States Dollar (B) / Chinese Yuan in Hong Kong (USD/CNH)