NEW YORK, Oct 1 (Reuters) - The dollar fell for a second straight session on Friday, tracking declines in U.S. Treasury yields, as investors booked profits after recent sharp gains, though the decline was viewed as temporary. U.S. 10-year Treasury yields were last at 1.484% , down nearly six basis points. For the week, the dollar index posted its largest percentage gain since late August, as investors looked to the Federal Reserve"s reduction of asset purchases in November and a possible rate hike late next year. Cautious market sentiment due to COVID-19 concerns, wobbles in China"s growth and a Washington gridlock ahead of a looming deadline to lift the U.S. government"s borrowing limit has lent support to the dollar, seen as a safe-haven asset. "The more hawkish stance appears to have been the key factor driving the dollar higher in late September," said Marc Chandler, chief market strategist, at Bannockburn Global Forex. "However, more immediately, fiscal policy is the focus, though investors appear to be looking through it, as many find it inconceivable that the U.S. would default on its debt," he added. In afternoon trading, the dollar index slid 0.3% to 94.046, having gained 0.8% this week, the largest weekly rise since late August. Friday"s batch of U.S. data was mixed, adding to dollar weakness ahead of the weekend. U.S. consumer spending increased more than expected in August, posting a 0.8% rise, but consumption was weaker than initially thought in July, dipping 0.1% instead of gaining 0.3%. Inflation remained elevated, but not by much. Core inflation as measured by the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, was up 0.3% in August, unchanged from previous month. read more In manufacturing, data was more upbeat. The Institute for Supply Management (ISM) said its index of national factory activity increased to a reading of 61.1 last month from 59.9 in August. read more In other currencies, the euro rose 0.1% to $1.1595, falling about 1.1% for the week, its biggest percentage fall since mid-June. The yen bounced back against the dollar from a 19-month low overnight, with the greenback last down 0.2% at 111.105 yen. Commodity currencies rallied against the U.S. dollar on Friday as well. The Australian dollar gained 0.6% to US$0.7270 and slumped 3.6% in the third quarter - the worst performance of any G10 currency against the dollar - as prices for Australia"s top export, iron ore, fell sharply. Sterling was also an underperformer last quarter, dropping 2.5%, and posting its worst week in more than a month, amid growing supply chain problems. Sterling was last up 0.6% though at $1.3552, just above a 9-month low at $1.3516. In cryptocurrencies, bitcoin rallied to a nearly two-week high of just under $48,000. It was last up 9.4% at $47,902 . Analysts cited seasonal factors, with the fourth quarter typically viewed as a bullish period for digital assets. Smaller coins ether and XRP , which tend to move in tandem with bitcoin, were up nearly 10% at $3,294 and 8.2% at $1.0299, respectively. ======================================================== Currency bid prices at 3:17PM (1917 GMT) Description RIC Last U.S. Close Previous Session Pct Change YTD Pct Change High Bid Low Bid Dollar index 94.0370 94.3120 -0.29% 4.508% +94.3950 +93.9850 Euro/Dollar $1.1596 $1.1578 +0.16% -5.09% +$1.1607 +$1.1564 Dollar/Yen 111.0950 111.2800 -0.16% +7.53% +111.4850 +110.9050 Euro/Yen 128.82 128.82 +0.00% +1.50% +129.0400 +128.5600 Dollar/Swiss 0.9305 0.9317 -0.11% +5.19% +0.9337 +0.9283 Sterling/Dollar $1.3555 $1.3477 +0.59% -0.78% +$1.3575 +$1.3434 Dollar/Canadian 1.2633 1.2685 -0.41% -0.79% +1.2738 +1.2628 Aussie/Dollar $0.7271 $0.7227 +0.62% -5.48% +$0.7276 +$0.7193 Euro/Swiss 1.0791 1.0784 +0.06% -0.15% +1.0808 +1.0773 Euro/Sterling 0.8554 0.8593 -0.45% -4.29% +0.8623 +0.8545 NZ Dollar/Dollar $0.6946 $0.6897 +0.72% -3.26% +$0.6951 +$0.6879 Dollar/Norway 8.6125 8.7400 -1.41% +0.35% +8.7820 +8.6160 Euro/Norway 9.9891 10.1205 -1.30% -4.57% +10.1728 +9.9867 Dollar/Sweden 8.7412 8.7585 -0.08% +6.66% +8.7878 +8.7392 Euro/Sweden 10.1379 10.1460 -0.08% +0.61% +10.1755 +10.1374 Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Ritvik Carvalho in London; Editing by Nick Macfie, Chizu Nomiyama and David Evans Our Standards: The Thomson Reuters Trust Principles.