The U.S. dollar rose Friday at the end of a volatile week, boosted by hopes for a degree of compromise in the trade war between the U.S. and China, the world's two largest economies.

At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, climbed 0.3% to 99.415, after a sharp rebound from a three-year low in the previous session.

Dollar helped by potential trade compromise

The dollar traded higher, helped by a Bloomberg report indicating that China's government is weighing the exemption of some U.S. goods from its 125% import tariffs, as the country grapples with the high economic cost of a trade war.

This followed U.S. President Donald Trump, earlier this week, hinting at potential trade negotiations with China, saying a potential deal could lead to a "substantial" reduction in tariffs.

Additionally, the Wall Street Journal reported on Wednesday that the Trump administration was considering reducing tariffs on Chinese imports to de-escalate trade tensions.

"Even though Chinese self-interest may well be driving these developments, investors are still welcoming some flexibility here," said analysts at ING, in a note.

The U.S. and China have become embroiled in a bitter, tit-for-tat tariff exchange this month, as Trump levied steep duties on Beijing in an apparent attempt to reduce Washington's massive trade deficit.

"The next big chapter here will be whether all this volatility has hit real world decisions - especially in the US jobs market. There is plenty of US jobs data released next week and any deterioration here could trigger another round of dollar losses," ING added.

Source: Investing.com