The Dollar stayed near a one-week high against major currencies on Friday, buoyed by the largest decline in US jobless claims in nearly a year, which eased concerns about a potential economic downturn.

Meanwhile, China's Yuan strengthened due to a stronger-than-anticipated inflation report and a more robust official exchange rate fixing.

The greenback remained stable against the Japanese Yen after a three-day rally, bolstered by a surge in Treasury yields. The stronger-than-expected employment data from Thursday led to a reduction in expectations for Federal Reserve interest rate cuts this year, Reuters reports.

Markets have experienced a turbulent week, largely due to unexpectedly weak US payroll figures from the previous week, which caused global stocks to drop sharply.

Whereas increased demand for safe-haven assets like the Yen and the Swiss Franc led these currencies to surge to their highest levels of the year on Monday.

At the time of writing, the Dollar dipped 0.1% to 147.08 Yen but is set for a weekly gain of about 0.4%, despite a sharp 1.5% drop on Monday.  

It also eased 0.1% to 0.8659 Francs, with a forecast weekly advance of 1%. 

Initial claims for state unemployment benefits dropped by 17,000 to a seasonally adjusted 233,000 for the week ending 3rd August, marking the largest decline in nearly 11 months.

Economists surveyed by Reuters news agency had predicted 240,000 claims for the week.

The likelihood of the Federal Reserve implementing a 50-basis point rate cut at its upcoming policy meeting on 17th-18th September declined to 54%, down from 69% the day before.

Meanwhile, the probability of a 25-basis point cut is now estimated at 46%, according to CME Group's FedWatch Tool.

“Despite the volatility in claims data, especially around this time of year, the data helped allay fears of a more rapid deterioration in the labour market,” said Taylor Nugent, National Australia Bank senior markets economist.

The significant Wall Street rally, which prompted a retreat from the Yen and Swiss Franc, was described as “an unusual reaction to a such a volatile weekly print ... underscoring the market's sensitivity to labour market indicators after Friday's soft payrolls,” he added.

The Dollar index, measuring the greenback against major peers, was down 0.1% at 103.17, following three days of gains. It climbed to as high as 103.54 overnight for the first time since 2nd August but was last seen trading roughly unchanged from a week earlier.

There was little change for the Euro at $1.0921, rising 0.1% from last week. The single currency hit a high of $1.1009 on Monday for the first time since 2nd January.

Whilst Sterling held steady at $1.2756 after a 0.49% rally overnight lifted it from a more than one-month low. Despite this rebound, it is still on track for a 0.4% decline this week, marking its fourth consecutive week of losses.