The dollar on Friday held near the previous day’s two-week low against a basket of peers after a spike in weekly jobless claims raised hopes that a peak in U.S. rates was near, while the focus turned to the upcoming week packed with central bank meetings.

The number of Americans filing new claims for unemployment benefits surged to the highest in more than 1-1/2 years last week, data on Thursday showed, though layoffs are probably not accelerating as the data covered the Memorial Day holiday, which could have injected some volatility.

Nonetheless, that was enough to knock the U.S. dollar to a more than two-week low against a basket of currencies in the previous session, as investors took the data as a sign that the U.S. labour market was slowing.

The dollar index last stood at 103.42, having lost more than 0.7% in the previous session, its largest daily decline since mid-March.

The index, which measures the U.S. currency against six major peers, is down 0.6% for the week, set for its biggest weekly fall also since mid-March when fears about the health of the banking sector roiled markets.

The euro was flat on the day at $1.07735 having gained 0.78% on Thursday to a two-week intraday high due to the dollar sell off. Sterling, which jumped nearly 1% on Thursday, was at $1.2545 just off a near one-month high.

The dollar rebounded against the Japanese yen however, rising 0.48% to 139.6 after Bank of Japan Governor Kazuo Ueda reiterated the central bank’s resolve to keep monetary policy ultra-loose.

Markets are now turning their attention to the coming week which will see the Federal Reserve, the European Central Bank (ECB) and the Bank of Japan (BOJ) announce interest rate decisions following their respective policy meetings.

The Fed takes centre stage, with money markets leaning toward a pause, though they have priced in a 25% chance that the U.S. central bank delivers a 25 bps rate hike.

“Before the meetings that we had this week I would have said I was expecting the status quo, now I’m not excluding something surprising, because a central bank like Canada, that had clearly telegraphed it was on hold, raised rates and said it was concerned about inflation,” said Chester Ntonifor, FX strategist at investment provider BCA.

The Bank of Canada on Wednesday lifted rates after a four-month pause because of surprisingly strong household spending and high core inflation.

“For me, it’s clear that the ECB is going to stay hawkish, I don’t think they’re going to be more hawkish than what’s already priced in by markets, what is interesting is the Fed,” Ntonifor said.

Ntonifor added that the message markets took concerning the possibility of U.S. rate cuts later in the year would be important for currencies.

The Canadian dollar was last at C$1.334 per dollar, not far from the C$1.3321 hit on Wednesday, its strongest in a month after the central bank’s move.

The Turkish lira tumbled more than 1% against the dollar to a record low after President Tayyip Erdogan appointed Hafize Gaye Erkan, a finance executive in the United States, to head Turkey’s central bank.

“A return to policy orthodoxy seems inevitable given the materially diminished foreign exchange reserves and 40% inflation,” said Mohammed Elmi, senior portfolio manager for emerging markets fixed income at Federated Hermes (NYSE:FHI).

Global equities were set for a small weekly gain on Friday following a Wall Street rally overnight, as rising bets the Federal Reserve will skip a rate increase next week overshadowed worries about U.S. markets being drained of cash.

MSCI’s broad index of global shares edged 0.2% higher, on track for a weekly rise of 0.6%.

Europe’s Stoxx 600 equity gauge was flat, following a 2% jump in Japan’s Nikkei, which rebounded strongly after its plunge from a 33-year high in the previous session.

Traders now lay 73% odds on the Fed keeping rates steady on June 14, in a range of 5%-5.25%, pausing its most aggressive hiking cycle since the 1980s.

Bets for a pause were supported by data overnight showing the number of Americans filing new jobless claims surged to a more than 1 1/2-year high, indicating a loosening labour market that could further quell inflation.

Investors also hope the Fed will pause its rate rise campaign as a quirk of the U.S. debt ceiling negotiations has posed a potential a threat to market liquidity.

The U.S. government is expected to rush to sell short term debt to replenish its Treasury General Account, potentially at yields so high that banks raise deposit rates to compete for funding, reducing interest in riskier assets like equities.

“We’re all worried about liquidity,” said Ben Jones, director of macro research at Invesco. The Fed, he added, “still wants to tighten,” policy and therefore may allow the TGA rebuild to drain liquidity from markets without stepping in to provide other support tools.

This fear was not dominating trading on Friday, however.

On Wall Street overnight, gains were led by the tech-heavy Nasdaq, which surged 1.27%.

The broader S&P 500 rose 0.62%. Its gains put the benchmark index up 20% from its Oct. 12 closing low and heralded the start of a new bull market, at least by the definition of some market participants.

On Friday, e-mini U.S. equity futures pointed to a steady start for each of the indices.

Fed Chair Jerome) said on May 19 it was still unclear if U.S. interest rates will need to rise further, and the risks of overtightening or undertightening had become more balanced.

YIELDS UP

Two-year Treasury yields, which are extremely sensitive to monetary policy expectations, rose about 3.5 basis points (bps) to around 4.55%. The 10-year yield edged up to 3.749% after tumbling 7 bps overnight.

The U.S. dollar index, which measures the currency against a basket of six major peers, rebounded 0.2% to 103.52.

The euro slipped 0.15% to $1.0765, just below Thursday’s two-week high of $1.0787.

Elsewhere, the Turkish lira extended its decline to a new record low of 23.5 per dollar, even as President Tayyip Erdogan’s appointment of a U.S. banker as central bank chief sent a strong signal for a return to more orthodox policy.

Erdogan had last week put well-regarded former finance minister Mehmet Simsek back in the post. Simsek said this week that the guiding principles for the economy would be transparency, consistency, accountability and predictability.

Leading crypto asset bitcoin briefly dipped before recovering to trade 0.5% firmer at $26,637 after crypto exchange Binance said it was suspending dollar deposits and would soon pause fiat currency withdrawal channels following a U.S. Securities and Exchange Commission crackdown.

Crude oil remained on the back foot after a report that the United States and Iran were close to a nuclear deal, although denials from both parties kept it off the previous session’s lows.

The prospect of a deal, which reportedly includes scope for an additional 1 million barrels per day of Iranian production, had knocked down West Texas Intermediate (WTI) crude by $3.50 to just shy of $69 at one point on Thursday.

WTI futures fell 0.3% to $71.09. Brent crude futures were off by the same amount at $75.75.

China’s year-on-year consumer inflation is projected to rise gradually in the second half of the year while, mainly due to base effects, second quarter economic growth is expected to be high, according to the central bank governor.

At present, China’s economy is recovering from the impact of COVID-19, and the balance sheets of its market entities are being repaired, the People’s Bank of China said in a statement on Friday, citing governor Yi Gang.