LONDON: The dollar moved higher on Friday, hitting a 10-week high against the yen, as a jump in US Treasury rates sent investors chasing higher yields into the greenback.
The US currency managed to claw back earlier losses after data showed US gross domestic product increased at a 2.6 percent annualised rate in the fourth quarter, above economists' forecasts for a 2.3 percent gain.
With US interest rates higher than in other developed economies, investors have been turning to the dollar for yield.
"What's the dollar rebound on? Is it sentiment or yield? The answer is it's just about yield," said Simon Derrick, currencies analyst at BNY Mellon.
The yen was the main casualty from the dollar's rise, losing as much as half a percent to 111.98 yen, a 10-week low.
The Japanese currency, along with fellow safe-haven currency Swiss franc, had been supported earlier in the week when tensions between India and Pakistan and the collapse of US-North Korea talks rattled markets.
Against a basket of rival currencies the dollar rose 0.1 percent to 96.259.
It was a quiet end to the week elsewhere, with most major currencies stuck in tight trading ranges.
The euro slipped 0.1 percent to $1.1360 before stabilising at $1.1373, keeping the single currency firmly in a trading range against the dollar it has been stuck in for several months.
While the US Federal Reserve in January rowed back on its policy tightening plans, other central banks appear to have followed - crushing volatility and leaving major currency pairs like euro/dollar treading water.
"January's central bank policy pivot which, depending on your bias, is either a counter-attack in the face of mounting threats to growth and inflation, or a retreat in the face of the asset market weakness at the end of 2018, points to a protracted period of low volatility in currency markets," Societe Generale strategist Kit Juckes wrote in a note to clients on Friday.
The Australian dollar rose 0.2 percent to $0.7106 as investors' mood improved.
The Aussie had skidded lower on Thursday after a disappointing reading on Chinese manufacturing overshadowed a solid report on domestic business investment.
The Canadian dollar rose 0.3 percent to C$1.3138. The loonie, as it is known, has strengthened in 2019 on higher crude oil prices and as investors' appetite for risk has rebounded from end-of-2018 nerves.
The benchmark 10-year US Treasury yield rose to 2.7204 percent after surging to 2.731 percent on Thursday, its highest since Feb. 6.
Sterling slipped to $1.3241 after its gains of the past week. Investors have bought back into the pound in the belief Britain will avoid a disorderly Brexit and could delay its departure from the European Union.