FOREX-Dollar depressed ahead of U.S. jobs data

(Recasts, updates prices, adds analyst quotes)
By Kate Duguid
NEW YORK, June 6 (Reuters) - The dollar dipped in Thursday
afternoon trade ahead of Friday's U.S. government jobs report,
which is forecast to show slowed growth and will inform market
expectations of interest-rate cuts in 2019.
The U.S. Labor Department's non-farm payrolls report
includes public and private-sector employment, both of which are
expected to have dropped in May, according to a Reuters poll of
economists.
A slowdown was evident in the ADP National Employment Report
released on Wednesday, which showed private U.S. employers added
27,000 jobs in May, well below the 180,000 forecast in a Reuters
poll forecast and the smallest monthly gain in more than nine
years. "The downside surprise in the ADP report implies downside
risks around our forecast as well as the consensus expectation
for the non-farm payrolls report on Friday, which both fall out
of the average error range of the ADP report," wrote analysts at
Morgan Stanley.
The dollar index was last down 0.30% at 97.030 .DXY ,
continuing its downward trend this week as weak data, continued
trade tensions and dovish comments from Federal Reserve members
have raised expectations of interest-rate cuts.
Accelerating the dollar's slide on Thursday was a jump in
the euro EUR= after the European Central Bank stopped short of
suggesting an interest rate cut and instead pushed back the
timing of its first rate hike since the 2008 financial crisis.
The euro rose because investors had expected an even more
dovish signal from the ECB and an acknowledgement of weak
economic growth in the bloc. The single currency was last 0.49%
higher at $1.127 after brushing a 1-1/2-month high of $1.131
earlier this week. The ECB "is taking a more proactive approach, rather than
the wait-and-see approach you're seeing from the Fed," said Minh
Trang, senior foreign exchange trader at Silicon Valley Bank.
That has led the euro to rally and the dollar to fall
because "if (the Fed) is behind the curve, they'll have to make
more drastic moves if the economy turns on them," said Trang.
"If you look at the last six months, (the Fed) has been
behind the curve. The market began pricing in a (U.S.) rate cut
six months ago."
Money market futures are now pricing in a 45% chance of a 10
basis point euro zone rate cut by the end of year versus 75%
before the ECB statement.