The US dollar rose to a two-week high against a basket of currencies on Friday on rising US yields, while sterling fell in the wake of disappointing economic data and dovish comments from the head of the Bank of England. The euro fell below $1.23 and is poised for its biggest weekly drop in two months as investors trimmed record high bets before a European Central Bank meeting next week where policymakers are largely expected to signal no change in policy.
Commodity-linked currencies came under pressure thanks to a drop in Chinese stocks, with the Australian and New Zealand dollars hitting their lowest in at least two weeks.
"Higher US yields have contributed to the rise in the dollar," said Chuck Tomes, senior investment analyst at Manulife Asset Management.
US two-year Treasury yields reached 2.453 percent on Friday, its highest since September 2008, on hawkish comments from some Federal Reserve officials this week. Longer-dated yields climbed as rising commodity prices bolstered bets on higher US inflation.
At 10:04 am (1404 GMT), an index that tracks the greenback versus a basket of six currencies rose 0.5 percent, to 90.39 after touching a near two-week high.
The euro hit $1.2264, the lowest in about two weeks. It was down 0.61 percent, at $1.2269, putting it on track for it steeply weekly drop in two months.
Sterling shed 0.4 percent to $1.4030, leading to a weekly loss of 1.4 percent which would be its biggest in 10 weeks.
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