The dollar fell against the majority of its most-traded counterparts as the Federal Reserve prepared to begin a two-day meeting amid signs the U.S. economy is slowing, and stocks and commodities rose. The greenback weakened to the lowest level versus the euro in almost a week. The 17-nation currency advanced as European leaders said a Greek default can be avoided and Prime Minister George Papandreou faces a confidence vote at 5 p.m. New York time. Treasuries declined, sending yields up. “Some of the fears of broader global, economic and financial disruption as a result of a Greek default are priced out a little bit, and market participants are tiptoeing back into risk,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “Bond yields are up, equities are doing relatively well and commodities are generally higher, so that has been weighing on the dollar broadly.” The dollar depreciated 0.4 percent to $1.4365 per euro at 9:31 a.m. in New York after reaching $1.4388, the weakest since June 15. The U.S. currency slipped 0.1 percent to 80.17 yen, from 80.25 yesterday. The euro was 0.3 percent stronger at 115.14 yen. “The play leading into the confidence vote has been to buy euros; the yes vote is priced in now,” Gallo said. All 87 economists in a Bloomberg News survey forecast the Federal Open Market Committee will keep the benchmark interest rate at zero to 0.25 percent, where it’s been since December 2008. Futures on the Chicago Board of Trade show the likelihood the central bank will increase its target rate by March 2012 dropped to 21 percent from 30 percent a month ago. Dollar Index The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, fell 0.4 percent to 74.749 and touched 74.67, the lowest level since June 15, from 75.029. Purchases of existing U.S. homes tumbled 5 percent to a 4.8 million annual rate in May, the weakest since November, according to the median forecast of 69 economists surveyed by Bloomberg News before the National Association of Realtors reports the data at 10 a.m. April home prices fell 0.3 percent, the Federal Housing Finance Agency will say tomorrow, according to projections in a separate survey. Fed Vice Chairman Janet Yellen said June 9 that a “long, drawn-out recovery” was likely for the U.S. housing market. “For its part, the Federal Reserve will continue to use its policy tools to support the economic recovery,” she said. The Standard & Poor’s 500 Index gained 0.4 percent, and the MSCI World Index traded 0.6 percent higher. The S&P GSCI Index of commodities rose for the first time in five days, gaining 0.4 percent. Papandreou Vote The euro was little changed against the Swiss franc as Greece’s Papandreou seeks to secure multiparty support for his government’s austerity measures, a condition for receiving aid needed to avoid a default. He called for the confidence vote last week after opposition parties rejected pleas for national consensus and the prime minister’s handling of the crisis led to defections from his party. The euro traded at 1.2113 francs, from 1.2106 yesterday, after touching a record low of 1.1947 on June 16. Greece needs parliamentary approval of a 78 billion-euro ($112 billion) package of budget cuts and asset sales to ensure the payment of a fifth loan under last year’s 110 billion-euro bailout. The euro’s gains were capped after a report today showed investor confidence in Germany, which aims to predict developments six months in advance, slumped to the lowest in 2 1/2 years this month. Pound Declines The pound weakened 0.5 percent to 88.69 pence per euro and traded little changed at $1.6202 as Bank of England Markets Director Paul Fisher said further bond purchases to stimulate the economy are possible. Australia’s dollar declined against most major counterparts after the nation’s central bank said domestic data had not added “any urgency” to the need for policy adjustment and it may be “prudent” to keep rates unchanged, according to minutes released today of a June 7 policy meeting. The Aussie fell 0.4 percent against the euro to A$1.3572. It was little changed versus the greenback at $1.0590. To contact the reporters on this story: Allison Bennett in New York at abennett23@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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