Early trade in New York: dollar ticks up but heads for worst week in nine months

The dollar limped up from a three-year low against a basket of currencies on Friday but remained on track to record its biggest weekly loss in nine months, as negative sentiment offset any support the greenback could take from higher Treasury yields.
"This is pre-long weekend position squaring," said Marc Chandler, chief global currency strategist at Brown Brothers Harriman & Co in New York, referring to the dollar's advance on Friday. "I think people don't have a lot of conviction."
The US currency has been weighed down by several factors this year, including the perceived erosion of its yield advantage as other countries start to scale back easy monetary policy. Traders' confidence in the dollar has also been worn down by worries over the United States' current account and budget deficits, with the latter projected to balloon to near $1 trillion in 2019 amid a government spending splurge and hefty corporate tax cuts.
The dollar index was on track to lose 1.6 percent on the week in its largest decline since May 2017. Traditional market correlations have been scrambled this week. Declines in the dollar have come as US Treasury yields have hit four-year highs and as stronger-than-expected US inflation has bolstered bets that the Federal Reserve could increase interest rates as many as four times this year.
"The market is befuddled by what seems to be changing inter-market relationships ... Last week the stock market was falling off because of rising yields. This week yields rose and stock markets rallied," said Chandler. The US currency traded slightly up on the day at 106.24 yen, having earlier sunk to a new 15-month low of 105.545 yen. Chandler noted the US 10-year yield and the yen this week reached the most inverse correlation since 2001.