The dollar edged up to 118.34 in Tokyo afternoon trade from 118.17 late Thursday in New York.

The euro rose to 1.2637 dollars from 1.2626 and to 149.46 yen from 149.21.

The greenback fell to two-week lows of 118.07 yen and 1.2639 per euro overseas after the latest US data reinforced expectations of US interest rates holding steady for the time being, dealers said.

The Philadelphia Federal index of manufacturing conditions dropped to minus 0.7 points in October, well below expectations of 7.0.

Commonwealth Bank currency strategist Besa Deda said in a note issued in Sydney that while the survey was lower than the minus 0.4 reading of September, the details were generally stronger than the headline weakness.

"Our central view is that the Federal Reserve will pause with rate hikes in the near term. But upside risks to US interest rates remain," Deda said.

At the same time US weekly jobless claims fell to their lowest level in almost three months, down 10,000 to 299,000.

Dealers said recent data had backed up predictions that the US economy is experiencing a soft landing and that the Federal Reserve is in wait-and-see mode, with a 'no change' decision seen as a done deal next week.

"The dollar will remain around (two-week) lows until the end of this week as traders wait for the Federal Reserve Meeting next week," said Hidenori Kato, head of foreign exchange sales at Societe Generale.

He added the market was also keen to hear a speech from Bank of Governor Toshihiko Fukui later Friday for leads on the outlook for further rises in Japanese interest rates.

Fukui was likely to reiterate his previous comments but there was a chance his remarks would fan expectations of a further interest rate rise here which could boost the yen, Kato said.