NEW YORK - The dollar slipped against some major currencies in thin trading Thursday, as investors consolidated positions and pondered how pivotal U.S. jobs data coming out on a stock trading holiday might impact Federal Reserve policy and unleash a potentially volatile market reaction.

The U.S. stock market is closed on Good Friday and some European countries are shut on Monday as well.

The closely watched U.S. non-farm payrolls report on Friday, when many markets around the world are closed, will follow disappointing manufacturing and services sector data from the Institute for Supply Management (ISM) and private employment figures on Wednesday.

In afternoon trading, the U.S. dollar index, which hit a two-month low this week, thanks in part to a drop in Treasury yields, was down 0.1% at 101.81.

Thursday's U.S. initial jobless claims report added fuel to the slowing-economy mantra.

The data incorporated revisions to previous numbers after the government updated the model it uses to adjust the series for seasonal fluctuations.

Initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 228,000 for the week ended April 1. But data for the prior week was revised to show 48,000 more applications received than previously reported.

In addition, the number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 6,000 to 1.823 million during the week ending March 25.

"The (initial claims) revisions paint a different picture from the start of the year, compared to what we thought then that the labor market was doing pretty well," said Amo Sahota, executive director at FX consulting firm Klarity FX in San Francisco.

"Now they're showing consistently higher claims. That's showing more moderation in the economy. They have dampened the mood a little bit and overall the soft landing scenario is not a reasonable prognosis right now," he added.

While the slew of sluggish economic data has caused traders to scale back bets on how much longer U.S. rates would need to stay in restrictive territory, it has simultaneously reignited concerns about the risk of recession. A U.S. recession though could prove beneficial to the dollar, analysts said.

"Net, net, a recession probably would be more dollar-supportive because the recession impact will not be just localized to the U.S. It's going to be global," Klarity's Sahota said.

The focus now turns to the U.S. employment report. Economists polled by Reuters expect non-farm payrolls to have grown by 239,000 in March, following February's 311,000 gain.

The non-farm payrolls number has been far more prone to delivering upside surprises than misses in the last year or two. For markets that are open on Friday, this could make for a highly volatile session.

The dour U.S. economic signs have strengthened the view that the Fed will reverse course on rate increases. U.S. rate futures markets are currently pricing in a roughly even chance of the Fed leaving rates unchanged at its next meeting, with multiple rate cuts being priced by the end of the year.

The dollar rose against the Japanese yen, up 0.4% at 131.765 yen. Meanwhile, the risk-sensitive Australian and New Zealand dollars dropped 0.7% to US$0.6679 and 1.1% to US$0.6251, respectively. Sterling slid 0.1% to $1.2451, while the euro was up 0.2% at $1.0931.

 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Amanda Cooper in London and Rocky Swift in Tokyo and Rae Wee in Singapore; Editing by Jamie Freed, Christina Fincher, Chizu Nomiyama, Marguerita Choy and Andrea Ricci)