Upbeat US economic data gave the dollar an edge over its peers on Friday, arresting a recent flight from the greenback while also supporting Asian currencies as investors toned down their recent gloom over the global economy. Separate surveys suggested the world's largest economy is in better shape than investors had feared. US service sector activity accelerated in August and private employers boosted hiring beyond expectations.
It contributed to a broad risk-on shift in currency, bond and stock markets stoked by news that China-US trade talks would resume next month.
The data kept the dollar steady against most major currencies while investors waited for a monthly payrolls report due at 1230 GMT for the next snapshot on the labour market's health.
"Investors are now hoping they can take this week's positivity over the finishing line, so fingers crossed the August US payroll report...doesn't throw a damp towel on the proceedings," said Stephen Innes, Asia Pacific Market Strategist at AxiTrader.
The optimism of the past few days bolstered the South Korean won and Australian and New Zealand dollars , setting them on course for their sharpest weekly gains since June, each adding more than a percentage point against the dollar.
The pound has had its best week since May, adding almost 1.4% on the dollar as parliament appeared to pull Britain back from the brink of a no-deal exit from the European Union by voting to delay leaving.
Sterling was flat at $1.2328 by 0628 GMT on Friday. Asian currencies drifted slightly higher.
The Australian dollar held close to a month-high struck on Thursday at $0.6817. The won touched a month-high of 1,198.40 per dollar, then retreated a little.
Against a basket of currencies the dollar was flat at 98.387. The euro was steady at $1.1040 at 0628 GMT.
The safe-haven yen, which was sold to a one-month low of 107.22 per dollar on Thursday, bounced a little to 106.99, a sign of some caution creeping in.
Meanwhile, the US non-farm payroll report due later on Friday is expected to show an increase of 158,000 and the unemployment rate holding steady at 3.7%. A miss could shatter already fragile sentiment.
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