TOKYO: The dollar headed for a weekly gain against major peers on Friday as doubts about an Iran peace deal buoyed the U.S. currency's safe-haven appeal.
The greenback also drew support from higher Treasury yields after a Financial Times report citing sources close to Federal Reserve Chair Kevin Warsh pointed to the potential for a September interest rate hike, depending on incoming data.
The closely watched monthly U.S. payrolls report , due later on Friday, could provide more clues on the Fed's rate path.
The dollar was mostly flat as of the Asian afternoon on Friday, trading little changed at 158.365 yen, after gaining 0.4% on Thursday.
That kept the dollar-yen pair on course to rise around 0.6% this week, as it recovered from a bout of joint Japan-U.S. intervention that sent it tumbling from near a four-decade high above 163 on Thursday to a 13-week low of 155.20 on Monday.
Against the euro, the greenback edged up to $1.1521 after strengthening about 0.3% in the prior session. The U.S. unit was flat versus sterling, changing hands at $1.3454.
The dollar index - which measures the currency against a basket of six major peers, including the euro, yen and sterling - rose marginally to 99.954, up a little over 0.1% for the week, following a 1.6% plunge the previous week.
Tensions continued to play out in the Gulf after Reuters reported a proposed deal between Iran and Oman to help end the U.S.-Iran conflict could give Tehran control over inbound traffic through the Strait of Hormuz.
The U.S. did not immediately comment on the proposal. President Donald Trump has said that a deal to reopen the strait was imminent, but U.S. officials have repeatedly insisted that they would never agree to Iranian control of access to the world's most important trade route for energy supplies.
Brent crude rose $1.31 on Friday to trade at $83.80 per barrel, after settling up more than $3 in the previous session.
The heightening inflation risks weighed on Treasuries, sending yields higher.
"USD was supported by higher oil prices (following) news that a deal between the U.S. and Iran to reopen the strait is further away than hoped," said Kristina Clifton, an economist at Commonwealth Bank of Australia.
She and other analysts also pointed to the FT report saying Warsh was open to a September hike, although Clifton added, "We expect the Fed to wait until December before starting a modest tightening cycle."
A divided U.S. central bank left rates unchanged last month, but Warsh said he was committed to bringing inflation down.
U.S. nonfarm payrolls are forecast to have risen by 80,000 last month after an increase of 57,000 in June, according to a Reuters survey of economists. The unemployment rate is expected to hold steady at 4.2%.
Meanwhile, the risk-sensitive Antipodean currencies faced some selling pressure. The Australian dollar weakened about 0.1% to $0.7028 and the kiwi dollar edged down 0.1% to $0.5864. - Reuters
