* Dollar falls after weaker-than-expected ADP report
* Euro still seen vulnerable with pressure staying on ECB
* Euro zone PPI falls more than expected; German jobless up
(Recasts, adds quotes, U.S. data, updates prices, changes
byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 7 (Reuters) - The dollar fell across the
board on Wednesday, reversing sharp gains against the euro
earlier this week, as steep job losses in the private sector
reignited fears of a prolonged U.S. recession.
The report, compiled by ADP Employer Services, pointed to
dismal news from the U.S. government's non-farm payrolls report
on Friday and may prompt some analysts to lower their already
weak forecasts for the month. A Reuters poll shows U.S.
non-farm jobs are expected to drop by 500,000 in December.
The dollar pushed back from nearly one-month highs against
the euro and five-week peaks versus the yen, with investors
locking in gains, including central bank buying of euros at
lower levels for reserve-management purposes and interest from
funds.
"The initial shock (of the private sector jobs report) is a
big one, and the market was leaning toward selling dollars to
begin with today," said Steven Butler, director FX trading at
Scotia Capital in Toronto.
He said in the past, the data has been unreliable, but
"it's still a pretty ugly number and should keep the dollar
under pressure for the rest of the session."
ADP's data showed U.S. private employers shed 693,000 jobs
in December, down sharply from the revised 476,000 jobs lost in
November and far more than economists estimated.
The median of estimates from 20 economists surveyed by
Reuters was for 473,000 private-sector jobs lost in December.
In early New York trading, the euro surged to a session
high at $1.3746 <EUR=>. It was last at $1.3669, up 1.2 percent
on the day, recovering from near one-month lows on Tuesday,
according to Reuters data.
The euro, however, remained vulnerable as euro zone data
showed a rapidly weakening economy and easing inflation there,
which raised prospects for the European Central Bank to cut
rates again next week.
Against the yen <JPY=>, the dollar fell to session lows at
92.45, down one percent, after hitting five-week highs the
previous day. The dollar last traded at 92.85 yen.
Alan Ruskin, chief international strategist at RBS Global
Banking and Markets, said recent revisions of the ADP data have
become a more reliable barometer of the upcoming non-farm
payrolls report.
"This number should then preempt much of the potential
dollar negative, bond positive, equity/risk negative response
that could have occurred on weak non-farm payrolls data this
Friday."
Ruskin thinks it will will probably "take dire real economy
data to shock a market that has become numb and learned to
expect the worst."
Earlier in the session, data showed euro zone producer
prices fell sharply in November, logging a record monthly
decline on a sharp drop in energy costs. []
That came on the heels of data the previous day showing a
smaller-than-expected rise in consumer prices, raising
expectations that the European Central Bank will be ready to
ease monetary policy, not only at its meeting next week, but
also going forward.
(Additional reporting by Steven C. Johnson; Editing by Chizu
Nomiyama)
