The dollar slipped back slightly on the news that fewer jobs than expected were created in the US in June, suggesting that economic growth is decelerating. Figures from the Labor Department showed payrolls increased by 121,000 in June, higher than the upwardly-revised 92,000 improvement in May (the original estimate was 75,000), but down on the 160,000 consensus forecast. In fact, market participants had been positioned for something even better after a strong survey earlier this week from the ADP Employer Services. Today's snapshot of job activity also showed that the nation's civilian unemployment rate held steady at 4.6 pct, diminishing concerns about the economy using up its spare capacity. Divyang Shah, global strategist at HBOS, said the payrolls are an important market event but stressed that inflation data are more important at present. "In the current environment it's the inflation data that has proved to be much more important as it is this that has surprised to the upside," he said. "Thus while the FX market will react to payrolls and probably play on it over next week, the events over the following week will prove more insightful as to the Fed rate outlook," he added. Expectations of a Fed rate hike in August diminished substantially to around a 65 pct probability last week when the Fed's policy-makers published a relatively dovish statement alongside its decision to lift its key Fed funds rate a quarter point for the seventeenth consecutive occasion to 5.25 pct. "The Fed's forecast is for a moderation in growth and today's weaker-than-expected payroll gain supports that view as well as our call for the Fed to pause in its rate hike cycle at the next meeting," said Michael Carey, senior forex strategist at CALYON. Elsewhere, the euro continued to make marginal headway in the wake of yesterday's hint that the European Central Bank will hike rates by a quarter point at its early-August meeting