Jan 3 (Reuters) - The dollar index fell on Friday, trimming this week's gains as U.S. equities vaulted higher and traders squared positions ahead of the weekend.
Treasury yields edged up following an upbeat ISM report and comments by Richmond Fed President Thomas Barkin.
Barkin said the outlook for the U.S. economy in 2025 is positive with more upside than downside risk to growth and that the Fed's benchmark policy rate should stay restrictive until it is more certain that inflation is returning to the central bank's 2% target.
The euro rose amid short covering after it fell to a 26-month low on Thursday.
The yuan fell amid slumping yields in China, PBOC rate cut expectations and the threat of U.S. tariffs. China's central bank said it will cut banks’ reserve requirement ratio and interest rates at a “proper time” during a quarterly meeting of its monetary policy committee held last week, according to a statement published on Friday.
Commodity currencies trailed gains in their non-greenback peers, tracking weakness in the yuan.
U.S. President Joe Biden officially blocked Nippon Steel's proposed $14.9 billion purchase of U.S. Steel.
Treasury yields were up 1 to 2 basis points as the curve flattened. The 2s-10s curve was down 1 basis point to +31.9bp.
The S&P 500 rose 1.2% on broad market gains.
Oil prices rose amid cold weather forecasts and expected economic stimulus flagged by China.
Gold fell 0.6%, hurt by higher Treasury yields while China stimulus hopes lifted copper by 1.3%.
Heading toward the close: EUR/USD +0.30%, USD/JPY -0.25%, GBP/USD +0.41%, AUD/USD +0.27%, DXY -0.40%, EUR/JPY +0.12%, GBP/JPY +0.14%, AUD/JPY -0.02%.(Editing by Burton Frierson Reporting by Robert Fullem)