* Euro on course for worst week since November 2016
* Dollar backs off four-month lows vs yen as safe-haven bids fade
* Strategists expect dollar weakness to resume despite rally
* Currency market volatility rises less than stocks, bonds
(Updates market action, changes dateline, previous LONDON)
By Richard Leong and Kate Duguid
NEW YORK, Feb 9 (Reuters) - The dollar rose on Friday, putting it on track for its strongest week against a basket of currencies in nearly 15 months as some traders piled into the greenback in a week of tremendous swings felt in stock and bond markets around the world.
The U.S. currency stemmed its protracted decline this week. Some traders have bought it to close out their bets on its weakness, while others favored the dollar in a safe-haven move over higher-returning but riskier currencies, analysts said.
"Overall, it's just a highly volatile environment where the idiosyncratic things that drive (the market) - fundamentals, economic data - are taking second stageEverything is becoming much more correlated in a very volatile environment," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.
The dramatic moves in equities and bonds this week were stoked by concerns about signs of inflation amid an improving global backdrop and speculation whether the Federal Reserve and other major central banks would act quicker to raise interest rates.
Equity and bond market volatility has surged this week. While foreign exchange marketshave been calmer, the turbulence was enough to upend some popular trades, analysts said.
Betting on the dollar weakening against the euro has been one of them, with an expanding euro zone economy stoking expectations the European Central Bank will shrink its balance sheet sooner than expected.
The single currency was last down 0.08 percent at $1.2235, marking a 1.7 percent drop this week which would be its steeply weekly decline since November 2016, Reuters data showed.
The greenback stabilized versus safe-haven currencies after Thursday's decline.
It rebounded from a four-month low to 108.66 yen, down 0.07 percent . It was up 0.47 percent at $0.9402 Swiss franc .
Against a basket of six major currencies, the greenback was up 0.21 percent at 90.420. On the week, the dollar index has risen 1.41 percent for its best week in almost 15 months.
The dollar's advance was supported by some stabilization in U.S. stock prices, a day after heavy selling sank the Dow and S&P 500 into correction territory. The bond market also calmed from its wild moves earlier this week. Benchmark 10-year Treasury yield was 1 basis point lower on the day at 2.838 percent, which was below a four-year peak of 2.885 percent on Monday.
The dollar also received support after Congress and U.S. President Donald Trump approved a federal budget plan that ended an overnight federal shutdown. ========================================================
Currency bid prices at 11:33AM (1633 GMT)DescriptionRIC Last U.S. ClosePct Change YTD Pct High BidLow Bid
Previous Change
Session Euro/DollarEUR=$1.2235$1.2245 -0.08% +0.00%+1.2287 +1.2228Dollar/Yen JPY=108.6600 108.7400-0.07% +0.00%+109.3000 +108.5100Euro/Yen EURJPY= 132.97 133.16-0.14% +0.00%+134.1600 +132.8300Dollar/Swiss CHF=0.9402 0.9358+0.47% +0.00%+0.9408 +0.9350Sterling/DollarGBP=1.3810 1.3911-0.73% +0.00%+1.3987 +1.3787Dollar/CanadianCAD=1.2606 1.2602+0.03% +0.00%+1.2683 +1.2560Australian/DollAUD=0.7811 0.7779+0.41% +0.00%+0.7830 +0.7760ar Euro/Swiss EURCHF= 1.1506 1.1465+0.36% +0.00%+1.1528 +1.1459Euro/SterlingEURGBP= 0.8858 0.8802+0.64% +0.00%+0.8879 +0.8778NZ Dollar/DolarNZD=0.7253 0.7215+0.53% +0.00%+0.7258 +0.7200Dollar/NorwayNOK=7.9717 7.9226+0.62% +0.00%+8.0566 +7.9022Euro/NorwayEURNOK= 9.7547 9.7083+0.48% +0.00%+9.8773 +9.6922Dollar/SwedenSEK=8.0957 8.1171-0.37% +0.00%+8.1564 +8.0884Euro/SwedenEURSEK= 9.9060 9.9430-0.37% +0.00%+10.0018+9.9062
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates in 2018 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>(Additional reporting by Tommy Wilkes in London; Editing by Peter Graff and Meredith Mazzilli)
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