The dollar was flat against a basket of major currencies today as dealers squared positions ahead of US jobs data later in the day and a meeting of Group of Seven finance chiefs over the weekend.
The dollar benefited from weakness in global equity markets after soft US economic data renewed fears over the global recovery, triggering profit-taking in higher-yielding currencies and risk reduction across the asset spectrum.
This meant investors bought back the dollars they had used to fund purchases of other currencies and assets in recent weeks, strengthening the US currency's safety bid in times of market uncertainty and diminishing appetite for risk.
But its gains were limited by falling US bond yields and expectations the G7 would repeat its call to rebalance the world economy, a process which will likely involve a weaker dollar and currency appreciation across much of Asia and emerging markets.
First up, however, is the latest US employment report early this afternoon, the economic indicator that has probably the single biggest impact on financial markets, encouraging traders to trim positions on the day.