Dollar heads for weekly loss as Fed hike bets fade, AI jitters linger

The dollar fell Friday, heading for its first weekly loss against the euro and yen in over a month, as fading Federal Reserve rate hike expectations and AI-driven equity selloff concerns weakened support for the greenback. Hotter-than-expected inflation data initially rattled markets, but Fed officials signaled no urgency to tighten policy, stabilizing Treasury yields. AI stocks dropped sharply, with stress spreading to credit markets over data centre profitability concerns, while the dollar index fell 0.17% to 101.87. Markets now see an 83% probability of the Fed holding rates unchanged this month, up from 49% a month ago. The Swiss franc and pound led gains, while French fiscal risks and higher oil prices remained background factors affecting currency movements.