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U.S. dollar notes are seen in front of a stock graph in this November 7, 2016 picture illustration.Reuters file [Representational Image]

The dollar hovered near a one-month low against its peers on Friday, weighed down by a subdued outlook toward US interest rates and the economy, while risk aversion in the broader markets boosted the yen.

The dollar index against a basket of six major currencies stood near 96.30 after falling to 96.168 overnight, its lowest since November 20. The index has lost roughly 1.2 per cent this week.

The greenback has slumped after the Federal Reserve signalled fewer interest rate hikes over the next few years than it previously projected and helped push long-term US Treasury yields to near nine-month lows.

The Fed's outlook accelerated the slide in Treasury yields, which had been declining on caution toward the world's biggest economy.

The US currency underperformed particularly against the yen as global stock markets sank after the Fed dashed investor hopes for a more dovish policy stance.

MSCI's gauge of global stocks has declined 3.7 per cent this week, touching its lowest since April 2017.

The dollar stood little changed at 111.25 yen JPY= after dropping to 110.815 overnight, its weakest since Sept. 6. The currency has lost nearly 2 per cent against its Japanese peer this week.

"We are seeing a classic case of 'risk off' lifting the yen against the dollar, something that had not taken place so often in the recent months," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

"U.S. markets, particularly equities, will continue dictating direction for the dollar in the near term. We may have to wait until the new year for risk aversion to settle."

The euro was 0.15 per cent higher at $1.1460 EUR= after nudging up to a 1-1/2-month peak of $1.1486 the previous day. The single currency was headed for a 1.4 per cent gain on the week.

The pound inched up 0.1 per cent to $1.2669 GBP=D4.

Sterling had climbed to a 10-day peak of $1.2707 on Thursday but pulled back from the high after the Bank of England kept interest rates on hold, saying Brexit uncertainty had "intensified considerably" over the last month.

The Australian dollar AUD=D4 was a shade higher at $0.7119, moving away from a near two-month trough of $0.7086 brushed the previous day following tumult in the global markets.