By Kevin Buckland
TOKYO, June 2 (Reuters) - The U.S. dollar wallowed near a one-week low versus major peers on Friday, on course for its worst week since late March, amid strengthening views that the Federal Reserve will forgo an interest rate hike this month.
Signs that a bill to suspend the U.S. debt ceiling and avert a disastrous default would soon become law also removed a pillar of support for the dollar, which had paradoxically been a key beneficiary because of its safe-haven status.
The U.S. dollar index, which measures the greenback against a basket of six rivals, was little changed at 103.57 in early Asian trading, after sliding 0.62% on Thursday, its worst day in almost a month.
For the week, the index is on course to lose 0.63%, which would be its poorest performance since the period ended March 26.
Philadelphia Fed President Patrick Harker said on Thursday that "it's time to at least hit the stop button for one meeting and see how it goes," referring to the June 13-14 meeting.
A day earlier, Fed Governor Philip Jefferson had said that "skipping a rate hike at a coming meeting would allow the committee to see more data before making decisions about the extent of additional policy firming."
Some softness in U.S. manufacturing data overnight supported the case for a pause, although jobs figures continue to print hot, putting even more focus than usual on the monthly non-farm payrolls report later in the day.
"The key is non-farm payrolls tonight, which could determine if there's going to be a hike in coming months, whether that's in June or July," said Shinichiro Kadota, senior currency strategist at Barclay in Tokyo.
"It's really data-dependent at this point," he added. "Maybe they hike in June, maybe in July, or maybe they don't hike any more."
Money markets currently see about 29% odds of a hike, down from near 70% earlier in the week.
The dollar ticked up 0.09% to 138.94 yen, making up some ground after dropping to as low as 138.44 on Thursday for the first time since May 24.
The pair tends to track U.S. long-term Treasury yields , which were at 3.61% in Tokyo after dipping overnight to the lowest since Nov. 18 at 3.57%.
The euro was flat at $1.0761, after reaching a one-week high of $1.07685 in the previous session, when European Central Bank President Christine Lagarde gave the shared currency a boost by saying further policy tightening was necessary.
Meanwhile, the U.S. senate looked set to pass a bill to lift the government's $31.4 trillion debt ceiling late on Thursday, with Democratic Majority Leader Chuck Schumer announcing: "We are avoiding default tonight."