The yen languished at two-week lows against the dollar early on Friday, having come under renewed pressure overnight after an encouraging rally on Wall Street dampened demand for the safe haven currency.

Upbeat earnings from the likes of Caterpillar (CAT.N) and 3M (MMM.N) helped drive U.S. stocks .SPX to a two-week high, which in turn lifted U.S. Treasury yields.

Higher yields usually have the effect of boosting the allure of the greenback against the yen and it duly climbed as high as 108.36 yen, gaining more than 1 percent on Thursday. It last traded at 108.19.

"Absent a major relapse into a risk-off mode, the USD is best positioned to gain against the low yielders such as JPY, EUR and CHF going into the FOMC meeting next week," analysts at BNP Paribas wrote in a note to clients.

"That said, we remain cautious about adding fresh USD longs at this stage, awaiting a stronger and more sustained recovery in Treasury yields."

The yen also lost ground against many of its global peers and some traders said this was because of a Wall Street Journal report that sparked talk of more easing from the Bank of Japan.

The WSJ article, citing people familiar with the central bank's thinking, said the BOJ now saw "a much bigger possibility of inflation slipping below 1 percent" due to falling oil prices.

The euro fetched 136.88 yen, having briefly popped above 137.00 for the first time since Oct. 10. The Australian dollar came within a whisker of 95.00 yen, reaching a high last seen on Oct. 9.

Reports that a New York hospital was running Ebola tests on a healthcare worker took a bit of gloss off Wall Street late in New York and developments there will be closely watched by investors in Asia, traders said.

Setting off fresh fears about the spread of the virus, a physician with Doctors without Borders, who recently returned from West Africa, is being tested for Ebola at a New York City hospital.

Also on the defensive, the euro dipped to a two-week low of $1.2614 but managed to reverse the fall to end flat in New York at $1.2647, where it currently stood.

Helping keep euro bears tethered, a closely watched survey showed Germany's private sector grew faster in October as manufacturing rebounded, suggesting Europe's largest economy may be gaining momentum in the fourth quarter.

The stand out currency overnight was the New Zealand dollar, which took a hammering in the wake of soft inflation data at home. The numbers were seen giving the Reserve Bank of New Zealand room to delay its next rate hike further into next year.

The kiwi dollar touched a near two-week low of $0.7795, before steadying just above 78 U.S. cents.

In Asia on Friday, China house prices due around 0130 GMT will be closely watched given ongoing concerns about the property market. ECONCN

"Property poses the single biggest risk to China at the moment and investors will be searching for any signs of stabilization. Further deterioration in China's property prices will be a real concern," said Stan Shamu, market strategist at IG.