LONDON/TOKYO - The dollar held steady near a one-week high versus major peers on Friday, on track to snap a five-week losing streak after robust economic data caused investors to pare bets on aggressive Federal Reserve interest rate cuts.

The Chinese yuan rose to its strongest since June 2023, while the euro was little changed as inflation data confirmed the message of national readings on Thursday that euro zone price pressures are quickly easing.

The U.S. dollar index - which measures the currency against a basket of six major peers - was flat at 101.40, after rising 0.36% on Thursday and touching the highest since Aug. 22 at 101.58. Overnight, U.S. data showed gross domestic product (GDP) grew at a 3.0% annualised rate in the second quarter, an upward revision from the 2.8% rate reported last month. "That's been the market mover from the price action overnight, particularly when you look at currencies and U.S. Treasury yields," said Rodrigo Catril, senior FX strategist at National Australia Bank, referring to the GDP reading. "The takeaway there - the highlight - is that the consumer was stronger than had previously been thought," he added.

The dollar is on course for a 0.7% gain this week, which would be its best week since the start of April. Over August though, it is set for a drop of about 2.5% on the back of cooling inflation and a slowing labour market.

Traders see a September rate cut as a done deal but, after the data, laid only 34% odds of a 50-basis point cut, down from 38% a day earlier, according to the CME Group's FedWatch Tool.

Investors were waiting for the release of core personal consumption expenditures price index, the Fed's preferred inflation gauge, at 1230 GMT (8:30 a.m. ET).

China's yuan firmed to a 14-month high on Friday, heading for its biggest monthly jump since November, amid growing corporate demand for the Chinese currency as expectations heighten for U.S. rate cuts.

Spot yuan strengthened as far as 7.0825 per dollar before last changing hands at 7.0913, on track for a rise of around 2% for August.

"In the short term, we cannot rule out the possibility of a 'stampede' for currency conversion" that could boost the yuan above 7.0 per dollar, China International Capital Corp (CICC) said in a note.

The euro was flat at $1.1075 after data showed euro zone inflation slowed to 2.2% year-on-year in August, down from 2.6% in July, leaving the European Central Bank on track to lower interest rates again next month.

The single currency fell to a more than one-week low on Thursday and ended down 0.4% after German inflation cooled more than expected, bolstering investors' expectations of ECB cuts.

Sterling rose 0.1% to $1.318 after dipping to $1.3146 overnight, a one-week low, as the dollar climbed.

The yen held near the closely watched 145-per-dollar level after weakening on Thursday, as the greenback tracked a rise in U.S. Treasury yields.

The Japanese currency largely ignored data on Friday showing core consumer prices in Tokyo climbing at a faster-than-expected 2.4% in August.

The Aussie rose slightly to $0.6805 after hitting the highest since Jan. 2 at $0.6824 a day earlier, as it continued to draw support from hotter-than-expected consumer price figures this week. The currency shrugged off an unexpected stagnation in retail sales data on Friday.

(Reporting by Harry Robertson in London and Kevin Buckland in Tokyo; Editing by Sam Holmes, Jacqueline Wong and Andrew Heavens)