By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The U.S. dollar and the Japanese yen gained a little ground Friday, finding continued support as investors' appetite for risk continued to fall, analysts said.
A lack of major economic data in Europe and the United States on Friday, however, made for range-bound conditions, strategists said.
"The week tells the story of the risk trades being taken off, though gains for the greenback and yen were relatively mild," wrote strategists at Brown Brothers Harriman.
The dollar index (DXY 75.56, +0.26, +0.35%) , a measure of the U.S. unit against a trade-weighted basket of rivals, rose 0.3% to 75.546.
The Australian dollar, which began the week trading near 94.00 U.S. cents, and the New Zealand dollar, have felt the brunt of the decline in risk appetite, the Brown Brothers Harriman strategists noted. The antipodean currencies have tended to be the biggest gainers during rising sentiment.
The Australian dollar was off 1.3% at 90.78 U.S. cents. The U.S. unit rose 1.4% versus the New Zealand dollar to trade at NZ$1.3850.
Jane Foley, research director at Forex.com, said risk appetite was left unsettled by Brazil's announcement this week of further measures aimed at restricting short-term speculative in-flows, as well as fears other emerging countries could soon follow suit. Read more about Brazil's new tax on ADRs.
The euro traded at $1.4828, down from $1.4916 in North American trade late Thursday. The euro is little changed versus the dollar on the week.
Economists at KBC Bank in Brussels said they remained skeptical toward the dollar and would remain so until the Federal Reserve offers a clear signal its coming closer to reversing its stimulative monetary policy.
In the meantime, swings in risk appetite and risk aversion are likely to continue accelerating or slowing the dollar's decline against the euro.
"This theme of risk appetite/aversion at some point will stop playing its role as a guide for currency trading in general and euro/U.S. dollar in particular ... However, at least for now we don't see a new trading theme yet that will be able to take over any time soon," they wrote.
The dollar traded at 88.91 yen versus the Japanese currency, down from 89.05 yen late Thursday.
The Bank of Japan upgraded its outlook for the economy on Friday, while policymakers unanimously voted to leave its overnight call-rate target unchanged at 0.1%.
The Japanese government, meanwhile, said that weak domestic demand had pushed the country into a "mild deflationary phase." Read about the BOJ decision and the government report.
The British pound fell to $1.6480 versus the dollar, down from $1.6653.
