The US dollar slipped on Friday and was heading for its first weekly decline this month as traders dialled down bets on where interest rates may peak and brought forward their views on the timing of rate cuts to counter a possible recession.

A significant factor this week has been the fall in oil and commodity prices, which has eased inflation fears and allowed equity markets to rebound. This has eroded the safe-haven bid that has been boosting the dollar against major currencies.

By 1045 GMT, the dollar index, which measures the greenback against six major currencies, slipped 0.2 per cent at 104.22.

That reversed a 0.2 per cent rise on Thursday, mostly driven by a euro decline after weak business activity data reduced bets for European Central Bank tightening.

The dollar, up 9 per cent this year, has lost some of its shine since investors started betting the Fed could slow the rate-tightening pace following another 75 basis-point increase in July. They now see rates peaking next March around 3.5 per cent and falling by nearly 20 bps by July 2023.

This rate hike repricing sent 10-year Treasury yields to two-week lows, while the dollar index has lost 0.4 per cent this week. For now though, Fed Chair Jerome Powell stressed the central bank’s “unconditional” commitment to taming inflation. Fed Governor Michelle Bowman too supported 50 bps hikes for “the next few” meetings after July.