The dollar was on track to notch up its third week of sharp gains as weak Chinese economic data compounded fears about a global recession.

The dollar index, which measures the currency against six others, slipped 0.1 per cent lower on Friday but remained around a 20-year high — taking it up 1.3 per cent for the week.

Boosted by haven buying as well as expectations of the US Federal Reserve raising interest rates again this month, the index has climbed 4 per cent in the past three weeks — its biggest ascent over that timeframe since 2020.

In equity markets, the FTSE All-World index of developed and emerging market shares added 0.2 per cent on Friday but was on course for a weekly loss of more than 3 per cent, taking its year-to-date fall to 22 per cent.

Hong Kong’s Hang Seng index, the main Chinese stock market accessible to international investors, fell 2.2 per cent on Friday, taking it 6.6 per cent lower for the week, in its largest weekly fall since March 2020.

“It is all about recession risk in the market right now,” George Saravelos, strategist at Deutsche Bank, said in a note to clients, as “the market keeps bringing forward the timing of a recession and (rightly) raises the probability of a hard landing”.

International oil benchmark Brent crude, which on Thursday fell to levels last seen before Russia’s invasion of Ukraine, ticked higher on Friday but was on track for a 5.3 per cent weekly loss.

“Unlike with financial assets such as shares, commodity prices are more coincident than anticipatory,” said Hani Redha, multi-asset fund manager at PineBridge Investments. “So what you can read from oil prices is that there is some demand weakness coming through.”

China’s economy expanded by just 0.4 per cent in the three months to June, compared with the same period last year, widely missing economists’ expectations for a 1.2 per cent rise amid stringent lockdowns driven by Beijing’s battle to eradicate coronavirus.

In the US, soaring inflation and market expectations of the Fed raising interest rates to more than 3.5 per cent by next February have combined with downbeat business surveys to darken the economic outlook.

Meanwhile, European governments are facing up to a worsening cost of living crisis as Russia cuts gas supplies in retaliation for western support of Ukraine.

The euro rose 0.4 per cent on Friday to $1.005, having fallen below $1 earlier this week for the first time in 20 years,

In European equities, the regional Stoxx 600 index rose 0.8 per cent in thin summer trading, with London’s FTSE 100 up 0.8 per cent. The Stoxx is trading about 16 per cent lower for the year.

Futures trading signalled Wall Street’s S&P 500 index would edge 0.3 per cent higher at the New York open.

In US Treasury markets, the yield on the benchmark 10-year note fell 0.02 per cent to 2.94 per cent. This yield, which underpins debt prices worldwide, has dropped from about 3.5 per cent a month ago as recession fears fed demand for low-risk government debt instruments. Bond yields fall as prices rise.

The two-year Treasury yield traded at 3.1 per cent, in a so-called inverted yield curve pattern that has historically preceded recessions.