Financial markets saw a rare breakdown in correlations on Friday with world stocks eking out modest gains after the previous sessions losses but the dollar strengthening.
In recent months, the U.S. currency and equities have worked almost in reverse tandem, with the former getting hit every time risk appetite bolsters the latter.
Investors are heading toward year-end seeking firm proof that the global economy is rebounding rather than just not getting worse. But at the same time there is a strong tendency to want to lock in profits.
This may be having some effect on the dollar, which has benefited from the profit booking in higher-yielding currencies.
Hedge funds are cashing out their positions to prepare for year-end redemption requests from their clients. And that move is encouraging others to take profits as well, said the head of a trading desk at a big Japanese bank.
As a result, the dollar was steady to slightly higher against a basket of major currencies <.DXY>. The euro slipped slightly to $1.4906 and Britain's pound was down a third of a percent at $1.6609.
Also breaking with current patterns, the steady dollar did not push gold lower. It was up slightly at $1,145 an ounce, albeit about $7 off its record high reached on Wednesday.
Gold tends to rise when the dollar falls because the metal becomes cheaper to non-dollar investors.
EUROPEAN STOCKS BOUNCE
MSCI's all-country world index (.MIWD00000PUS> was up 0.1 percent after a 1.6 percent fall on Thursday. It was heading for a small weekly loss despite hitting a year high on Monday.
We're still stuck in a tight range, and this could last until December, said David Thebault, head of quantitative sales trading at Global Equities in Paris.
European shares rebounded from the previous session's sharp falls and snapped a three-day losing run, aided by gains in commodity stocks.
The FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.4 percent after losing 1.6 percent on Thursday.
Earlier, Japan's Nikkei <.N225> fell 0.5 percent and logged its first four-week losing streak in over a year.
Euro zone government bonds were little changed.
(Additional reporting by Dominic Lau and Satomis Noguchi; Editing by Andy Bruce)