The U.S. dollar emerged from the overnight session with modest gains against its top peers, finding support from a still elevated level of investor caution that boosted its safety attraction.

Overall this week, risk aversion has been the main market theme, after the

Fed

signaled that the recovery had shifted into a lower gear, a notion that was underscored by weak U.S. data on the housing market.

Major currency pairs largely kept toward recent ranges ahead of this weekend's G20 summit of world leaders in Toronto. Europe's debt crisis, ways to spur economic growth and financial reform are expected to be among the main topics of discussion. Currency matters are likely to move to the back burner now that China appears amenable to a firmer currency. Still, any appreciation in the Chinese currency is expected to be modest.

On the week, the yuan, also known as the renminbi, has gained about 0.6% against its U.S. counterpart, a slender margin not nearly enough to help reduce the hefty trade gap between the U.S. and China.

The Canadian dollar rose slightly against the U.S. dollar on Friday. Still, the market's overall bias toward less risky assets has kept the loonie in close range of yesterday's two-week low against the greenback.

U.S. data due out Friday include the final revision to U.S. GDP (the broadest gauge of economic growth) and a reading on consumer sentiment from the University of Michigan.

EUR

: The euro softened against the dollar Friday as persistent worries about sovereign debt in the euro zone kept broad pressure on the single currency. Underscoring the euro's overall heavier tone, the common currency held near record lows against the Swiss franc and a 19-month trough against the UK pound.

After posting weekly gains against the U.S. dollar the past two weeks, the euro is on pace to fall about 1% for the week against both its U.S. and Canadian rivals. The euro's recovery from a four-year low touched earlier this month was mostly spurred by bouts of investor short-covering.

The 16-nation currency also received a reprieve from selling after the Fed this week restated its intention to leave U.S. borrowing costs at ultra-low levels over the next several months. Consequently, Europe's common currency is likely to adhere to its current, well-worn ranges over the near term.

GBP

: The British pound eased by the slightest margin against the U.S. dollar, as risk wary investors scoped up the dollar on account of its safe haven status. Most world stocks dipped into negative territory, with Japanese shares tumbling nearly 2%.

Fresh worries about the strength of the global recovery have led many investors out of riskier assets such as stocks, commodities and currencies like the euro, sterling and the Canadian and Australian dollars. At the current rate, the pound stands to gain about 0.75% for the week against its U.S. rival, a rally inspired by optimism about an aggressive budget the U.K. unveiled Tuesday to improve its fiscal position.

JPY

: The Japanese currency remained near Thursday's one-month high against the U.S. dollar, finding strong support from the market's overall risk averse disposition. The yen is also garnering support from expectations any U.S. interest rate hike will come later rather than sooner.

The Fed's renewed vow to keep U.S. lending rates at record lows near zero will leave the dollar vulnerable as a funding currency for carry trades in which investors sell lower-yielding currencies for higher-yielding ones like the euro, sterling and the Aussie and kiwi dollars. Data overnight showed Japan's consumer price index fell 1.2%(y/y) in May, which was a touch less worse than the -1.3%(y/y) forecast. Japanese consumer prices have now fallen 15 straight months, underscoring the nation's battle against deflation.

USD

: U.S. gross domestic product, considered the nation's economic scoreboard, was surprisingly revised downward to 2.7% on an annual basis during the January to March quarter compared to expectations for a 3% annual rate. The data showed that consumer spending in Q1 was downwardly revised to 3% from the 3.5% that was first reported.

The weaker pace of U.S. growth in the first three months of the year played up the Fed's weaker pace of recovery. Through Q1, the U.S. economy has now expanded three straight quarters following its worst economic downturn since the 1930s when the economy contracted four consecutive quarters. The dollar held relatively steady against its major rivals following the release of the somewhat stale piece of data.