The safe haven yen slipped and the Australian dollar extended its rally on Friday as an apparent de-escalation in the U.S.-China trade war gave market confidence a significant boost in Asian trade.
News of a phone call between U.S. President Donald Trump and Chinese President Xi Jinping raised hopes of an easing in U.S.-China trade tensions.
Investor sentiment was given a further shot in the arm on Friday after Bloomberg reported that Trump had asked U.S. officials to begin drafting a possible trade deal with China.
Against the safe haven yen, the dollar was up 0.3 percent at 113.03 yen, paring the previous day’s losses.
The greenback was still short of a three-week high of 113.385 yen reached mid-week ahead of the closely-watched U.S. jobs report due later in the day.
The Australian dollar climbed 0.5 percent to $0.7242, stretching its rally from the previous day.
The Aussie, which is sensitive to Chinese economic developments, had jumped 1.8 percent on Thursday on increasing confidence U.S.-China ties were improving.
Against a basket of six major currencies, the dollar steadied ahead of U.S. jobs data, after pulling back from 16-month highs in the previous session as investors cautiously moved back into riskier assets.
The dollar index was little changed at 96.321 after dropping nearly 0.9 percent overnight, weighed by a rallying sterling.
Sterling was steady at $1.2998 and retained the bulk of its gains after surging 1.8 percent on Thursday, its biggest one-day gain since April 2017.
The euro inched up 0.05 percent to $1.1414 after gaining 0.9 percent overnight on the dollar’s retreat. The single currency had stooped to a 2-1/2-month trough of $1.1302 on Wednesday.