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The dollar rally is coming undone in a week that saw dovish Federal Reserve comments combine with disappointing economic data to cut the odds of higher interest rates this year to below 50 percent.

A gauge of the greenback fell from the highest this month after Fed Governor Lael Brainard started the week by saying the case for tighter policy was “less compelling.” Her speech was followed by a retail-sales report that fell short of analysts’ forecasts, while a measure of data surprises slid to the lowest since June. The odds of Fed action by year-end are the lowest in a month, while those for next week’s meeting have fallen to 18 percent.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 of its major peers, was little changed as of 6:54 a.m. in London on Friday. It has fallen 0.2 percent from its Tuesday close, which was the highest since Aug. 31. The dollar has declined 0.6 percent to 102.07 yen for the week, and is little changed at $1.1239 per euro.

Futures show a 49.7 percent chance the Fed will raise rates this year, from a recent high of 64.7 percent on Aug. 26, after Chair Janet Yellen said the case for tightening had “strengthened.” The odds of an increase at the Sept. 20-21 meeting peaked at 42 percent.

The consensus view from over 100 economists polled by Reuters in the past week showed the fed funds target rate will rise to 0.50-0.75 percent in the fourth quarter, with a median 70 percent probability of a December move.

“Near term, the dollar is likely to come under pressure as the Fed stands pat next week,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “We still see a resurgence in dollar strength towards the end of the year as the Fed prepares the market for a December hike.”

Japan Inc Sees BOJ Stimulus As Failing To Spur Inflation -Reuters Poll

Few Japanese companies see the central bank's aggressive monetary stimulus as achieving its stated goal of spurring inflation, a Reuters poll found, with firms citing negative fallout from the programme more than positive effects.

Asked in a monthly Reuters Corporate Survey to assess the impact of 3-1/2 years of super easy money policy by picking two effects from a series of options, only 6 percent of firms said the BOJ had paved a path towards defeating deflation or accelerating inflation - the very aim of its stimulus programme.

The results of the poll, conducted Aug. 30-Sept. 12, come as the BOJ prepares for next week's monetary policy meeting, at which it will conduct a comprehensive review of its stimulus programme after failing to reach its 2 percent inflation target.

Most analysts, however, expect the central bank to double down on its bold easing stance with a deepening of negative interest rates or an expansion of asset purchases mentioned as options it may pursue.

Among the negative effects cited in the poll, around 40 percent of respondents cited the destabilisation of financial markets while a quarter said it causes lax fiscal discipline.

Oil prices drop on returning Libya, Nigeria supplies

Oil prices fell on Friday on worries that U.S. rig counts would continue to rise and that returning Libyan and Nigerian exports would stoke a global supply glut.

Brent crude futures were trading at $46.20 per barrel at 0643 GMT, down 39 cents, or 0.8 percent, from their last settlement. U.S. West Texas Intermediate futures were down 36 cents, or 0.8 percent, at $43.55 a barrel.

Reference: Bloomberg, Kitco, Reuters