The dollar edged up against the yen and other currencies on Friday, trimming earlier losses, as global investors gingerly dipped their toes back into riskier assets amid rapidly shifting views on US monetary policy. The dollar edged up 0.1 percent to 106.850 yen.
It had dropped nearly 1 percent overnight as US Treasury yields retreated from four-year peaks. The greenback was given some reprieve, however, as yields leveled off. The yen tends to be bought in times of market volatility, thanks to its perceived status as a safe haven currency.
"US yields may have declined a little bit (from their peaks) but caution towards their recent rise and their negative impact on equities linger," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo. "The yen will attract demand under such conditions." The dollar index against a basket of six major currencies rose 0.2 percent to 89.865.
The index had reached a 10-day high of 90.235 on Thursday, from a three-year trough of 88.253 late last week, before its rally lost a bit of steam. It was on still on track to gain 0.9 percent on the week. The euro slipped 0.2 percent to $1.2306 after gaining 0.4 percent the previous day. The common currency has lost 0.9 percent so far this week, following its ascent to a three-year top of $1.2556 on February 16.
The yen showed little reaction to data which showed Japan's annual core consumer inflation rate was unchanged in January from the previous month, reinforcing views that the Bank of Japan remains distant from exiting its super loose monetary policy.
Japan's nationwide core consumer price index, which includes oil products but excludes volatile fresh food costs, rose 0.9 percent in January. The pace remained far from the BoJ's 2 percent inflation target. The pound was a shade lower at $1.3947 following overnight gains of 0.3 percent. Sterling was en route for a weekly loss of about 0.5 percent.
The Australian dollar dipped 0.2 percent to $0.7828 after gaining 0.5 percent the previous day. The Aussie was on track for a loss of 0.85 percent this week. The New Zealand dollar fell 0.5 percent to $0.7303 in the wake of the greenback's broader strengthening.