According to a key U.S. jobs report, the dollar went for a second straight week of gains against major peers on Friday, after a string of central banks this week pushed back against faster tightening of monetary policy.
The timing for Federal Reserve interest rate increases could be enhanced later on Friday as investors will be watching new U.S. labour market data later on Friday.
The dollar index, which measures the dollar against a basket of six rivals, has strengthened nearly 1% over the past week and consolidated its gains on Friday, up 1% ahead of the jobs data at 94.452.
Since a number of the biggest global central banks knocked back bets for early rate hikes, investors have been forced to reset monetary policy expectations this week.
The decision by the Bank of England not to lift rock-bottom benchmark rates proved the biggest shock for markets, which pushed sterling to its biggest one-day fall in more than 18 months, as much as 1.6% on the day.
The pound fell a further 0.4% on Friday, hitting a new one-month low of $1.34290.
Despite inflationary pressure and held rates, the Reserve Bank of Australia stuck to its dovish stance. The Aussie is on the track for a nearly 2% weekly fall, and was last down 0.2% on the day at $0.73795.
European Central Bank President Christine Lagarde was shocked on Wednesday against market bets for a rate increase as soon as next October, and said it was very unlikely that such a move would occur in 2022.
The dollar index went back to its high at 94.561 after scaling back of expectations outside of the US, according to analysts at MUFG.
According to further evidence that activity in the US is picking up again, a stronger US dollar has been encouraged in recent days. Fed Chair Jerome Powell said on Wednesday he was not in rush to increase borrowing costs, even as the Federal Open Market Committee announced a $15 billion monthly tapering of its $120 billion in monthly asset purchases.
The Fed has set a labour market recovery as a condition for a rates lift-off. The economy expects to show a 450,000 surge in jobs in October, following a 194,000 rise in the prior month.
The FOMC delivered a "dovish taper," but the USD is still better positioned than most, Westpac strategists wrote in a client note.
The euro was little changed after it dropped 1.5% overnight, while the dollar was a flat against the yen at 113.745 yen.
Among cryptocurrencies, it was about $62,000, having largely traded sideways since it hit its all-time high above $67,000 last month.