• Risk aversion took hold as the broader markets braced for North Korea celebrating its founding on Saturday, and as powerful Hurricane Irma headed for Florida after wreaking havoc in the Caribbean.
The dollar index against a basket of six major currencies was down 0.5 percent at 91.191 after going as low as 91.011, its weakest since January 2015 and on track its biggest weekly loss in nearly 3-1/2 months.
With interest rates markets now pricing in only a 1 in 5 likelihood of a U.S. rate hike by the end of the year from 1 in 3 in barely two weeks, bond yields have fallen, weighing on the dollar
• The euro rose to a fresh 2-1/2 year high on Friday as currency bulls judged the central bank’s concerns about the strengthening currency at Thursday’s policy meeting as lukewarm at best.
With the U.S. dollar breaking below some key levels overnight, particularly below 108 against the Japanese yen, investors were also keen to play the divergence outlook trade between the greenback and the euro.
The euro was resting at $1.2062 after vaulting to $1.2092 in early trades, its highest level since January 2015. It has gained nearly 15 percent so far this year and is the best performing currency so far this year in the G10 FX space.
• The window to stop North Korea from being able to attack the U.S. with a nuclear bomb is closing fast.
U.S. defense analysts now believe North Korea has as many as 60 nuclear bombs, and the ability to put them on missiles. Kim Jong Un declared that the entire U.S. territory was within striking distance after his regime twice tested an intercontinental ballistic missile called the Hwasong-14 in July. On September 3, Pyongyang conducted its sixth and most powerful nuclear test yet.
• The Federal Reserve should continue gradually raising U.S. interest rates given low inflation should rebound, an influential Fed policymaker said in a Thursday speech that sounded slightly less confident than his previous hawkish comments in the face of weak price readings.
New York Fed President William Dudley did not repeat an assertion three weeks ago that he expects to raise rates once more this year, and he called the persistent shortfall in prices surprising. Yet he reinforced the U.S. central bank’s general expectation that an inflation rebound is around the corner, allowing it to continue tightening monetary policy before too long.
• China on Friday reported August exports were up 5.5 percent from a year ago in dollar terms, while imports were up 13.3 percent in dollar terms.
Analysts polled by Reuters expected a 6.0 percent rise in Chinese exports in August from a year ago in dollar terms. August imports were forecast to rise 10.0percent in the same period.
China's August trade balance was $41.99 billion, data from the General Administration of Customs showed the country's surplus with the U.S. rose to $26.23billion from $25.2 billion in July. The two countries' trade is closely-watched amid current tensions between the economic giants about trade practices.
• Oil markets were mixed on Friday, with Brent crude supported by expectations that Saudi Arabia could cut its October supplies, while U.S. crude was weighed down by refinery outages due to damage from Hurricane Harvey, which dented demand.
Brent crude futures LCOc1 were up 8 cents at $54.57 a barrel at 0735 GMT, with the benchmark for international oil prices earlier marking its highest since April at $54.79 a barrel.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $48.98 barrel, 11 cents below their last settlement.
Reference: Reuters,CNBC,Bloomberg
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