The euro dropped to its lowest level this month against the dollar as the European Union struggled to break a deadlock on a second Greek financial rescue. Europe’s shared currency remained weaker after the cost of living in the U.S. rose more than forecast in May and a measure of manufacturing in the New York region unexpectedly shrank in June. Sterling fell versus the dollar after a report showed Britain’s jobless claims rose in May more than economists forecast. Australia’s dollar fluctuated after the Reserve Bank of Australia’s governor said policy makers will need to increase interest rates. “The fact that the data is very poor gives market participants more of an excuse to continue to unwind their euro long positions,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “There is contagion risk in Europe and it’s acting to weigh on the euro, or boost the dollar.” A long position is a bet that an asset will increase in value. The euro fell 1.1 percent to $1.4289 at 9:26 a.m. in New York, from $1.4440 yesterday, after touching $1.4264, the lowest level since May 30. The currency slid 0.7 percent to 115.42 yen, from 116.23. The dollar gained 0.3 percent to 80.76 yen, from 80.49, after touching 81.06, the highest level since June 2. Europe’s currency has depreciated 1 percent in the past week against nine other developed-nation currencies, according to Bloomberg Correlation-Weighted Currency Indexes. The dollar has risen 1.3 percent. Merkel Versus Sarkozy German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet on June 17 in Berlin, with pressure mounting for the leaders to resolve their differences over a rescue for Greece. Standard & Poor’s lowered Greece’s credit rating on June 13 to the lowest among nations. EU finance ministers agreed yesterday to convene again on June 19 after they failed to reconcile a German-led push for bondholders to share part of the cost of a new plan for Greek aid. European Central Bank warnings were backed by France that the move might constitute the region’s first sovereign default. Moody’s Investors Service placed the ratings of BNP Paribas SA, France’s biggest bank, and local rivals Societe Generale SA and Credit Agricole SA on reviews that will focus on their holdings of Greek public and private debt. Sterling weakened as the Office for National Statistics reported that the U.K.’s jobless claims rose by 19,600 in May after a revised 16,900 increase in the prior month. The median forecast of 22 economists in a Bloomberg News survey was for an increase of 6,500. The pound lost 0.8 percent to $1.6249. U.K. Sentiment U.K. consumer confidence jumped the most in 5 1/2 years in May as Britons became less pessimistic about spending and the extra public holiday for the royal wedding led to a “feel-good factor,” Nationwide Building Society said. Nationwide’s index of sentiment gained 11 points to 55, the highest in five months. The pound touched 87.74 pence per euro, the strongest since June 2. Australia’s dollar fluctauated after RBA Governor Glenn Stevens signaled inflation figures next month may be essential to the timing of an interest-rate increase, boosting bets that borrowing costs will advance. “New information will, as always, be important in our monthly assessments of what monetary policy needs to do,” Stevens said in prepared remarks today in Brisbane, the capital of Queensland. “As far as prices are concerned, we will get another comprehensive round of data in late July.” The Aussie fell 0.2 percent to $1.0663 after appreciating 0.3 percent. The currency rose 0.1 percent to 86.09 yen. ‘Aussie Is Outperforming’ “The Aussie is outperforming on the back of Stevens’s comments,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “Aussie and Canada will come under selling pressure if equities and commodities remain in offer tone.” The Standard & Poor’s 500 Index fell 0.7 percent and the Thomson Reuters/Jefferies CRB Index of commodities fell 0.4 percent. Canada’s dollar declined 0.3 percent to 97.12 cents per U.S. dollar. The consumer-price index increased 0.2 percent, compared with the 0.1 percent median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The core measure, which excludes more volatile food and energy costs, climbed 0.3 percent, the biggest increase since July 2008. The Federal Reserve Bank of New York’s general economic index dropped to minus 7.8, the lowest level since November, from 11.9 in May. The median forecast in a Bloomberg News survey of economists was 12. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut. Taiwan’s dollar advanced 0.6 percent to NT$41.4240 versus the euro. Against its U.S. counterpart, it was little changed at NT$28.824. China increased yesterday the reserve-requirement ratio for banks, spurring speculation Taiwan’s policy makers will raise borrowing costs this month. Taiwan’s inflation accelerated to 1.66 percent last month, the fastest pace since February 2010, a report showed on June 7. To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Garth Theunissen in London gtheunissen@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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