Dollar Weakens vs. Euro on Unfavorable Macroeconomic Reports

The euro erased its yesterday’s losses against the U.S. dollar as Spanish bond auction alleviated fears of the European debt crisis, while the dollar was weakened by some unfavorable macroeconomic reports. An unexpected increase of initial jobless claims and a sharp drop of Philadelphia Fed index were especially frustrating. EUR/USD currency pair trades currently near 1.2388.

Initial jobless claims was 472k in the previous week, an increase from the previous week’s revised figure of 460k. This unexpected jump frustrated market participants, who actually expected a drop to 452k.

Consumer Price Index (CPI) declined 0.2% in May on a seasonally adjusted basis, matching the forecasted value. This decline followed a drop of 0.1% in April.

Current account balance deficit increased to $109.0 billion (preliminary) in the first quarter of 2010, from $100.9 billion (revised) in the fourth quarter of 2009. The median forecast was more pessimistic, promising an increase to $120.0 billion.

Philadelphia Fed index decreased notably from a reading of 21.4 in May to 8.0 in June. It was expected to move down only slightly to 21.1

Leading indicators increased 0.4 percent in May, exactly as forecasts promised, following no change in April.