The dollar edged up in quiet trade on Friday, with position squaring by speculators giving the currency a boost as many market players stuck to the sidelines before much-awaited US inflation data later in the session.
After tumbling last week to one-year lows against the euro and sterling and eight-month troughs versus the yen, the dollar got a respite this week from investor caution over a global sell-off in emerging markets, stocks and commodities.
The spike in volatility has made many wary of taking big positions in currencies for now, while the dollar and US Treasuries have benefited from investors yanking funds out of riskier assets.
"People are just very nervous about positions across the board," said Rick Lloyd, head of currency trading at ABN Amro in Sydney.
"There's been a lot of position liquidation and not a lot of rhyme or reason to it. All markets are overreacting to every little perceived change in monetary policy. It might take a few weeks to settle down," he said.
With holidays looming on Monday in both the United States and Britain, market players had more reason to cover short positions.
Traders said the dollar was helped up from the day's lows after US President George W. Bush said Treasury Secretary John Snow had not spoken to him about resigning.
Before Bush's comment, Republican sources said that Snow would likely step down in mid- to late June. But traders brushed aside the speculation, saying the bigger issue is who succeeds Snow. The dollar climbed 0.3 percent to 112.15 yen after touching an intraday low of 111.47 yen in early Tokyo trade.
The euro slipped to $1.2770 from around $1.2800, but it edged up to 143.20 yen.
The yen was unable to get a boost from data showing core consumer prices in Japan rose 0.5 percent in April from a year earlier, the sixth straight increase and providing more evidence that seven years of deflation are history.
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