Dollar on track for biggest weekly rise since June '06

NEW YORK (Reuters) - The dollar slipped on Friday on light profit taking but was still on track for the biggest weekly rise since June 2006 as investors increasingly expect the U.S. growth slowdown to drag on other economies.

The euro was off three cents in the week against the dollar and was seen weakening more in coming days on growing expectations the European Central Bank will cut interest rates later this year despite stubborn inflation pressures.

"Despite a torrent of bad economic news the dollar has been on a tear this week, as the currency market recognized the fact that the slowdown in U.S. economic activity is likely to drag down growth in the rest of the G10 universe, forcing other central banks to adopt a much more accommodative monetary policy," said Boris Schlossberg, chief currency strategist with DailyFX.com in New York.

The euro edged up 0.2 percent on the day to $1.4505, but was down 2 percent on the week, the largest weekly decline in 1-1/2 years.

The dollar was down 0.1 percent at 107.40 yen.

For the week, the New York Board of Trade's U.S. dollar index was up 1.54 percent to 76.605.

The euro had jumped to a session high after a report said that OPEC may adopt the euro and abandon the dollar when pricing oil. However, those gains were short lived.

"If it happens, it's huge." said Joe Manimbo, a currency trader at Ruesch International in Washington D.C. "Trade is thin ahead of G7 and those headlines really hit."

Finance ministers and central bank heads at the Group of Seven rich nations will meet on Saturday.

(Reporting by Kevin Plumberg and Vivianne Rodrigues; Editing by Tom Hals)