• The euro hovered near a three-year high against the sagging dollar on Friday, while improving investor risk appetite weighed on the yen.
The euro was 0.05 percent higher at $1.2074 after rising 0.45 percent overnight.
The euro has been supported as U.S.-euro zone debt yield spreads have narrowed recently with the European Central Bank poised to curtail its massive stimulus programme and eventually join the Federal Reserve in normalising monetary policy.
The euro has gained 0.6 percent so far this week and a rise above $1.2092 would take it to its highest level since January 2015.
Weighed down by the greenback’s weakness against the euro, the dollar index against a basket of six major currencies was poised on a loss of 0.3 percent this week.
It probed a three-month low of 91.751 on Tuesday and last stood at 91.838, headed for its third week of losses.
• A rough patch for the U.S. dollar, which just recorded its worst annual performance in 14 years, is forecast to ease in 2018 but is not over yet, according to a majority of foreign exchange analysts in a Reuters poll.
• The British pound is set to mostly hold steady against both a shaky dollar and the firming euro this year, but much will hinge on progress in Britain’s talks with Brussels on its withdrawal from the European Union.
• The United States said on Thursday it was suspending an undisclosed amount of security assistance to Pakistan, which two officials said was worth more than $255 million, until Islamabad takes action against the Afghan Taliban and the Haqqani network.
• North and South Korea will hold official talks on Jan. 9, South Korea’s unification ministry said on Friday, after Pyongyang sent a statement accepting Seoul’s offer for talks next week.
The agenda will include the Pyeongchang Winter Olympics as well as other issues of mutual interest, ministry spokesman Baik Tae-hyun told a regular briefing.
• Mohamed El-Erian, chief economic advisor at Allianz, has spoken of a "beautiful normalization" the Fed has achieved in raising rates off the near-zero level prevalent from the financial crisis until December 2015. The Fed has managed to guide the markets off crisis-era policies without causing inordinate disruptions, and in fact oversaw a market in 2017 that set historic new lows in volatility despite three rate increases.
The challenge will be doing it again in 2018 while the European Central Bank also is reversing its own high levels of policy accommodation.
Powell "is going to have to navigate the way toward rate hikes in the U.S. against the backdrop of a European Central Bank that is beginning this process as well," Krosby said. "He's going to make sure the market accepts rate hikes. He'll telegraph it well in advance so that the transition from normalization to tightening is a smooth one."
How that fits into market behavior is the bigger question mark. If the Fed's schedule outpaces market expectations because of faster inflation, that's one factor that could take the shine off another big year for stocks.
• Oil prices fell on Friday, dropping away from highs last seen in 2015, as soaring U.S. production undermined a 10-percent rally from lows hit in December that was driven by tightening supply and political tensions in OPEC member Iran.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $61.95 a barrel at 0619 GMT. That was 6 cents below their last close, though still near the $62.21-high reached the previous day, which was their strongest since May, 2015.
Brent crude futures LCOc1 were at $67.99 a barrel, 8 cents below their last settlement, but still not far off the $68.27-peak from the day before, also the highest since May, 2015.
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