The dollar drifted higher in late deals Friday, helped along by the firm tone on both equity and bond markets amid thin trading conditions, analysts said.
The single European currency stood at US$1.1319 against US$1.1373 late on Thursday in New York.
The dollar traded at ¥119.02 against ¥119.03 on Thursday.
"Stocks are higher and bonds are more confident," said Julian Jessop at Standard Chartered, adding that the market's worst fears that continued selling on both fronts would drive the dollar down had been allayed.
There was also evidence that the economic recovery in the US was gathering pace, he added.
Indeed, a recent raft of US data including Thursday's jobless claims and productivity have been unambiguously sturdy.
Foreign central banks were active buyers of US assets in the past week, in turn lending the dollar a helping hand.
"The latest Federal Reserve data for the week to Wednesday August 6 shows foreign central banks bought US assets for the first week in four weeks, purchasing 4.8 billion of US Trea-suries and agencies," said Mansoor Mohiuddin at UBS. "This ... appears driven by Asian central banks intervening to support the dollar."
Meanwhile, with the summer holiday period in full swing, the many empty trading desks also mean that activity levels have dropped off, analysts said.
Overnight, US bond and equity markets turned in strong performances partly on the recent run of good US data and partly due to the successful completion of the US$60 billion US quarterly refunding operations.
The record US quarterly refunding is now out of the way. Despite the poor reception for the three-year tranche, subsequent five- and 10-year bond auctions went well, restoring market confidence.
The euro was not particularly hurt by news of Italy slipping into recession.
After a 0.1-percent decline in the first quarter, Italian gross domestic product was down again in the second.
"Italy is in recession. These numbers come as no surprise, for instance they are in line with the industrial production numbers released this morning which also show a sizeable decline," said UBS economist Stephane Deo.
The yen was slightly weaker but once further intervention from Japanese authorities remained a possibility, analysts said.
The euro was changing hands at US$1.1319 from US$1.1373 late on Thursday in New York, ¥134.69 (¥135.37), £0.7043 (£0.7028) and 1.5373 Swiss francs (Sf1.5360).
The dollar was being quoted at ¥119.02 (¥119.03) and 1.3582 Swiss francs (Sf1.3506).
The pound was at US$1.6080 (US$1.6182), ¥191.35 (¥192.61) and 2.1840 Swiss francs (Sf2.1855).
On the London Bullion Market, the price of an ounce of gold rose to US$353.95 from US$351.60 on Thursday afternoon.
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