Mubasher: US dollar declined against a basket of currencies on Friday driven by lower demand for safe-haven among investors in hope that trade meeting between Washington and Beijing next week would degenerate tensions between both sides.

Easing concerns over the aftermath of the plunging Turkish lira (TRY) also supported the euro (EUR) versus the greenback. The common currency rose 0.22% to $1.14, recovering from a more-than-13-month trough it hit earlier this week on investor jitters over the Eurozone banking system exposure to Turkey.

After stumbling nearly 7% earlier on Friday, the Turkish lira on Friday dropped more than 5% on Friday, over worries about the threat of additional US economic sanctions, should not Ankara release Christian pastor Andrew Brunson.

In addition, the Japanese yen (JPY) and the Swiss franc (CHF), which typically rise at times of geopolitical and financial tensions, were higher during the day.

The Canadian dollar (CAD) also rose against its US peer after the country’s annual inflation rate unexpectedly picked up steam, triggering prospects of interest rate hikes next month.

By 4:02 pm GMT, the US dollar index, which tracks the greenback against six major currencies, dropped 0.38% to 96.2750, after hitting a 13-month high on Wednesday.

Next week low-level trade discussions between the US and China offered some hope that the world’s largest two economies would resolve their tariff dispute to avoid an all-out trade war.

Although the scheduled meeting could not yield a breakthrough progress, it was regarded as a positive step towards easing the strained trade ties between Washington and Beijing, futures brokerage FXTM research analyst Lukman Otunuga stated in a note.

“There was considerable risk aversion through the early part of the week with fears of Turkish contagion weighing on risk assets and that seems to have reversed somewhat here,” Toronto-based Cambridge Global Payments strategist Karl Schamotta told Reuters.