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US dollar gains on stock bounce and China's upbeat data

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The US dollar climbed on Friday against a basket of currencies as global equity prices rebounded from this week's rout and robust Chinese export figures soothed worries about the world's second-biggest economy and its trade war with Washington.

[NEW YORK] The US dollar climbed on Friday against a basket of currencies as global equity prices rebounded from this week's rout and robust Chinese export figures soothed worries about the world's second-biggest economy and its trade war with Washington.

Euro and sterling snapped their three-day winning streak in advance of next week's European Union summit where Britain and the European Union may strike a Brexit deal.

China's exports jumped 14.5 per cent in September from a year earlier, the biggest year-over-year increase in seven months and marking a record trade surplus with the United States.

The data suggested that the tariffs US President Donald Trump has slapped on Beijing have yet to bite.

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Market voices on:

"The market breathed a sigh of relief with the Chinese trade numbers despite the tit-for-tat trade war with the US," said Dean Popplewell, vice-president of market analysis at Oanda in Toronto.

"People were happy to put on some risk."

A weaker yuan likely mitigated the sting from US duties on US$250 billion worth of Chinese-made goods, analysts said. US Treasury Secretary Steven Mnuchin said on Friday that he told China's central bank chief that currency issues need to be part of any further US-China trade talks.

An index that tracks the dollar versus six major currencies was up 0.23 per cent at 95.234, reducing its weekly loss to 0.4 per cent.

The dollar index touched a seven-week high of 96.15 on Tuesday as the US 10-year Treasury yield hit a seven-year peak due to worries about rising inflation and US government debt supply.

"The underlying sentiment remains positive for the buck, but vulnerabilities, as this week exposed, remained, particularly on the political front ahead of US midterm elections next month," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

The MSCI All-Country World index, which tracks stock prices in 47 countries, was up 0.57 per cent on the day.

It was down 4.4 per cent on the week, which was its steepest decline since at least March.

On Wall Street, share values rose on solid bank earnings and a bounce in the tech sector.

The euro and pound retreated from two-week and three-week peaks, respectively, versus the greenback after EU Brexit negotiator Michel Barnier in comments on Wednesday suggested an agreement for Britain to leave the EU could be reached next week.

The single currency was down 0.27 per cent at US$1.1562, while sterling was 0.59 per cent lower at US$1.3157. The common currency also fell after European Central Bank President Mario Draghi toned down his outlook for a rise in underlying inflation from "relatively vigorous" to "gradual". 

The Chinese yuan fell 0.65 per cent to 6.9227 per US dollar in offshore trading, as the latest Chinese export figures stoked concerns they would ratchet up trade tension between China and the United States.

REUTERS