SINGAPORE, Sept 8 (Reuters) - The dollar was headed for its longest weekly winning streak in nine years on Friday, bolstered by a resilient run of U.S. economic data that has also put the end of the Federal Reserve's aggressive rate-increase cycle into question.
In Asia, China's yuan plumbed new lows in both the onshore and offshore markets, as it battles capital outflow pressures and a widening yield gap with major economies.
The U.S. dollar index, which measures the greenback against major peers, was last 0.15% lower at 104.89 but remained not far from the previous session's six-month high of 105.15.
The index was on track to extend its gains into an eighth straight week, and is up 0.6% thus far.
The euro, the largest component in the dollar index, was staring at eight straight weeks of losses, with the single currency last gaining 0.19% to stand at $1.0714, after having fallen to a three-month low of $1.0686 on Thursday.
"This week's story was very much about the resilience we've seen in the data ... the market's psychology is that things just look so much better in the U.S. than they do elsewhere in the world," said Ray Attrill, head of FX strategy at National Australia Bank.
Data out this week showed the U.S. services sector unexpectedly gained steam in August and that jobless claims hit their lowest level since February last week, while in the euro zone, industrial production in Germany, Europe's largest economy, fell by slightly more than expected in July.
"Comparing the current growth fundamentals of Europe and the U.S., the U.S. still looks superior," Attrill said.
Sterling edged away from Thursday's three-month low and last bought $1.2495, though was still set to clock a weekly loss of more than 0.7%.
IN THE DOLDRUMS
The onshore yuan opened at 7.3400 per dollar on Friday and hit its weakest level since December 2007 at 7.3478, while its offshore counterpart sank to a 10-month low of 7.3600 per dollar.
China's currency has depreciated steadily since February as the faltering post-pandemic economic recovery and widening yield gap with other economies, particularly the United States, affected capital flows and trade.
The onshore yuan has fallen roughly 6% against the dollar so far this year and has become one of the worst-performing Asian currencies alongside its offshore counterpart.
"The travails of a stumbling (yuan) ... reveals the complexity and profusion of China's underlying economic stress points amid confidence deficit," said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
The yuan's rapid decline has prompted authorities to step in to slow the pace of its depreciation.
The Australian dollar, often used as a liquid proxy for the yuan, was last 0.15% higher at $0.6386, but eyed a weekly loss of 1%.
The New Zealand dollar similarly was on track to lose roughly 0.8% for the week and last bought $0.5893.
Also on traders' radars was a struggling yen, which steadied at 147.25 per dollar but remained on the weaker side of the key 145 level that prompted an intervention by Japanese authorities last year.
Japanese Finance Minister Shunichi Suzuki
said on Friday
that rapid currency moves were undesirable and that authorities wouldn't rule out any options against excessive swings, in a fresh warning to investors trying to sell the yen.
(Reporting by Rae Wee Editing by Shri Navaratnam and Gerry Doyle)
