NEW YORK ? The dollar sank on Thursday after a series of poor US economic indicators added to concerns that a fragile recovery from recession is stalling, unsettling global equities markets.
The euro rose above $1.25 for the first time in more than a month, lifted in part by a successful bond issue by Spain and the disappointing US data.
The single European currency fetched $1.2524 at 2100 GMT, up from $1.2228 late Wednesday in New York.
The dollar also fell against the Japanese currency, to 87.62 yen from 88.46 yen.
"A potential change in the trading pattern is emerging in the financial markets," said Andrew Busch at BMO Capital Markets.
"The euro is rallying today with soft Chinese and US economic data that in the past led to euro selling," he said.
"This is occurring with the backdrop of a potential Moody's sovereign downgrade of Spain and with Moody's downgrading five Spanish regions today."
A raft of negative US economic indicators weighed on sentiment on the eve of Friday's closely watched monthly jobs report.
New claims for US unemployment insurance benefits last week surged more than anticipated and pending US home sales plunged 30 percent in May after the expiration of an April 30 tax-credit deadline, more than twice as much as analysts expected.
The US manufacturing sector, which has been driving the almost year-old fragile economic recovery from recession, grew for the 11th straight month in June but at a slower pace than expected, the Institute of Supply Management's purchasing managers index showed.
"The numbers were unusually negative for the dollar," said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank.
"Recently most often when we had bad economic numbers it put stress in the market and that was usually positive for the dollar," he said.
Kathy Lien at Global Forex Trading said the big moves on the forex market underline questions about the strength of the US recovery as investors braced for the Labor Department's June labor data.
Stubbornly high unemployment near double digits poses a major challenge to the recovery that began almost a year ago and has so far been supported by government spending.
Job growth is considered a key factor in getting the economy on a sustainable growth track.
"The market's focus has already turned to Friday's nonfarm payrolls report and unfortunately all signs point to an ugly number," said Lien.
Most analysts expect the unemployment rate to rise to 9.8 percent in June from 9.7 percent in May. The economy was forecast to shed 100,000 non-farm jobs after adding 431,000 the previous month, mainly due to temporary government hiring for the 2010 census.
In late New York trading, the dollar slid to 1.0593 Swiss francs from 1.0777 on Wednesday and the pound firmed to $1.5175 from $1.4942.
