LONDON: The dollar fell broadly on Friday before jobs data that could add to concerns about the US economic outlook and the prospect of more monetary easing from the Federal Reserve.
Economists expect US April non-farm payrolls at 1230 GMT to show relatively modest jobs growth of 145,000, up from 88,000 in March and a steady unemployment rate at 7.6 percent.
The dollar's biggest falls were against the euro, which rose after European Central Bank policymaker Ewald Nowotny said the market was over-interpreting comments about possible negative interest rates in the euro zone.
The index measuring the dollar's performance against six major currencies was down 0.25 percent at 82.029.
If the payrolls data adds to recent signs of a softening in the US economy, it could feed speculation the Federal Reserve might boost rather than scale back its bond-buying programme.
Such talk would weigh on the dollar in the short run. A better-than-expected number could offer the currency some relief from its recent losses, especially against the yen.
"If we have a weak number, expectations will grow for the Fed to act," said Geoffrey Yu, currency strategist at UBS.
The dollar was steady against the yen at 98.05 yen in fairly subdued trade as Japanese markets were closed.
"If there is a weak number we could get a squeeze lower in dollar/yen, and euro/yen could fall with it," said Paul Robson, currency strategist at RBS.
However, he said market participants had grown more pessimistic about the US jobs outlook after weak private payrolls earlier this week. The dollar could therefore enjoy a small relief rally if the data matches consensus, he said.
EURO GAINS
The euro was up 0.35 percent at $1.3109 as Nowotny's comments helped it recover from losses on Thursday when ECB President Mario Draghi said the bank was technically ready for negative deposit rates and noted downside risks to the economy.
However, it remained well below a two-month high of $1.3243 set on Wednesday on trading platform EBS.
A negative deposit rate would penalise banks for hoarding cash and could drive money out of the euro zone.
"Putting the deposit rate into negative territory comes at a significant cost, undermining especially money market fund flows into weaker peripheral banks," Morgan Stanley said in note.
"Bearing these costs in mind and Draghi showing his readiness to use the negative deposit rate anyway is one of the clearest indications that the ECB wants a weak exchange rate."
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