Yen backpedals on hopes of easing U.S.-China trade tensions

On Friday the dollar held firm against the yen, as comments from Beijing sparked renewed hopes that China and the United States could get full-fledged negotiations back on track to resolve their protracted trade dispute. The U. S. currency was also supported by investors' month-end rebalancing needs, which has helped lift the dollar index to its highest level in a month.

China's commerce ministry said on Thursday, Beijing and Washington were discussing the next round of face-to-face talks scheduled for September. The U.S. President Donald Trump announced some discussions were taking place on Thursday, ahead of a looming deadline for additional U.S. tariffs on Sept. 1. The signs of talks were enough to mitigate worries about a further escalation in bilateral tensions, which intensified last week after both countries imposed additional tariffs on each other's goods late last week.

Meanwhile, political risks from UK to Hong Kong and the Middle East added to the risks for the global economy and kept many investors on edge.

The dollar index (=USD) rose to as high as 98.554 on Thursday, a top was last seen on Aug. 1, and last stood at 98.439. Against the yen, the greenback traded at 106.53 yen, flat from late U.S. levels and up 1.1% on the week.

The euro was little changed at $1.1058 (EUR=), having hit a four-week low of $1.1042 in the previous session, hurt by a sluggish eurozone economy and likely monetary easing from the European Central Bank (ECB) next month.