LONDON, Aug 2: The dollar fell across the board on Friday as dealers braced for a disappointing US jobs report after a slew of sluggish economic data in recent days cast doubt on the pace of the US recovery.

After tracking global equity markets higher at the start of the week, the dollar resumed its downward path on Thursday as a shock slide in a key US manufacturing index fuelled concern the economy could slow down again in the second half of the year.

The market is now highly sensitive to weak economic data and has already started to position for a disappointing US jobs report, said Ian Stannard, currency strategist at BNP Paribas.

The dollar fell to a one-week low of $0.9918 per euro in European trade as gloom over the US economy contrasted with a survey showing euro zone business sentiment unexpectedly improved in July.

The greenback has now shed almost two cents from four-week highs scaled early on Thursday and is only three cents away from two-and-a-half year lows plumbed last month.

The greenback also fell as far as 118.75 yen, its lowest level since Monday, as a mid-week push to three-week highs ran out of steam.

US stock index futures were pointing to a lacklustre start on Wall Street after major indices chalked up losses of more than 2.5 per cent on Thursday.

Investors were keeping a wary eye on US employment data, due on Friday, for a broad snapshot of the health of the jobs market.

The unemployment rate for July is expected to hold steady at 5.9 per cent and show 69,000 new payroll jobs after growth of 36,000 in June.

However, analysts said the market was already downgrading its expectations after the previous day’s weak manufacturing report and after data on Wednesday showed the US economy was pulling out of recession far more slowly than previously anticipated.

The foreign exchange market is very nervous about the US economy and the jobs data would be the last number this week to scare the market, said Steven Saywell, senior currency strategist at Citibank.

Data earlier in the day was broadly positive for the euro, showing economic sentiment in the 12-member euro zone deteriorated by less than expected in July, while business confidence actually improved.

The European Commission’s business climate indicator rose to minus 0.35 in July from a revised minus 0.45 in June.

It’s slightly encouraging and a surprise on the upside because people were expecting a fall, said Stuart Green, Europe economist at Credit Lyonnais.

However, he noted that recent data had shown the euro zone to be just as vulnerable as the United States to the global slowdown.

Citibank’s Saywell said much of the euro’s outperformance against the dollar in this context was due to the region’s healthier trade position.

The issue here is the US needs strong global growth to fund its current account deficit, he said.—Reuters