The dollar held firm on Thursday, supported by higher U.S. Treasury yields, as investors began to price in the prospect of Federal Reserve rate hikes this year, while the global focus was on a two-day summit between U.S. President Donald Trump and China's Xi Jinping, Reuters reported.
Xi told Trump that trade talks were making progress but warned that disagreement over Taiwan could send relations down a dangerous path, framing a high-stakes meeting Trump called possibly the "biggest summit ever".
As the summit got under way, China's onshore yuan traded around three-year highs. In offshore trading, the currency strengthened for an eighth straight day against the dollar to 6.7845.
In the broader market, the dollar held steady on Thursday, leaving the euro little changed at $1.1717, set for a 0.6% loss this week, which would mark its largest decline in two months.
Against a basket of currencies, the U.S. dollar was last at 98.48, up more than 0.6% for the week so far and heading for its strongest weekly performance since the start of the Iran war.
It reversed early gains against the yen to trade a touch lower at 157.87 , as the Japanese currency drew support from comments by Bank of Japan board member Kazuyuki Masu, who said the central bank should move to raise interest rates promptly if there are no clear signs of an economic slowdown.
Japanese authorities are believed to have intervened several times in the past couple of weeks to temper the dollar's strength, but with traders now pricing in the prospect of the Fed raising rates this year, the yen is flagging. The U.S. currency has now recovered 50% of the losses incurred since officials stepped in to prop up the yen.
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