The euro fell against the dollar for the first time in three days as calls for new elections in Greece dimmed prospects for austerity measures needed to ensure an aid package to prevent the currency union’s first default. The 17-nation euro declined for a fourth day versus the yen, its longest losing streak in six weeks, before the Greek parliament resumes debating a motion of confidence in Prime Minister George Papandreou’s government. The greenback strengthened against 14 of 16 major peers as investors bought safer assets. Japan’s currency weakened against the dollar after a report showed its exports fell more than forecast. “Our inclination would be to sell into euro rallies,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “We’re not at all convinced that Greece has the political will to deliver everything that its lenders want from it.” The euro fell to $1.4260 as of 12:40 p.m. in Tokyo from $1.4306 in New York on June 17. The shared currency declined to 114.35 yen from 114.52, extending last week’s 0.6 percent drop. The dollar rose to 80.19 yen from 80.05. Papandreou kicked off a three-day debate yesterday on a confidence motion in his government. He called for the 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. Antonis Samaras, leader of New Democracy, the largest opposition party in Greece, repeated his call for elections. Greece needs parliamentary approval of a 78 billion-euro ($111 billion) package of budget cuts to ensure the payment of a fifth loan under last year’s 110 billion-euro bailout. ‘Precarious’ Greek Government Investors should sell the euro on gains above $1.43 on concern the Greek government is “a little too precarious,” Westpac’s Callow said. The median forecast of 49 analysts polled by Bloomberg News is for the euro to fall to $1.40 by December. Euro-area finance ministers today pushed Greece to pass laws to cut the deficit and sell state assets, and left open whether the country will get the full 12 billion euros promised for next month. “We forcefully reminded the Greek government that by the end of this month they have to see to it that we are all convinced that all the commitments they made are fulfilled,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing the seven-hour meeting. ‘Really Voluntary’ Role Declines in the euro were limited after Juncker, who leads the region’s group of finance ministers, said any role for private investors in a new rescue package for Greece “has to be really voluntary.” The euro climbed on June 17 after German Chancellor Angela Merkel retreated from demands that bondholders be forced to shoulder a “substantial” share of a Greek rescue, saying she’ll work with the European Central Bank to avoid disrupting markets. Merkel’s comments came in joint press conference with French President Nicolas Sarkozy. “Now that Germany and France have reached an agreement and seem to be broadly singing the same tune as the ECB, I certainly think we will get that second package and at the very least it will postpone the problem,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a unit of the world’s largest interdealer broker. “Medium-term prospects for the euro are good.” Federal Reserve The dollar strengthened on speculation the Federal Reserve won’t signal another round of quantitative easing in a meeting on June 22, increasing appetite for safer assets. The odds that the Fed will increase interest rates by March 2012 fell to 22 percent on June 17 from 32 percent a month ago. The central bank has kept its benchmark rate unchanged between zero and 0.25 percent since December 2008. It will conclude its $600 billion dollar bond-buying program, so-called quantitative easing, by the end of this month. “Our economists expect the FOMC to make the formal decision to conclude QE2 at the end of June,” Barclays Plc strategists including London-based Sara Yates said today in a research note to clients. Fed Chairman Ben S. Bernanke will likely reiterate that the balance of risk doesn’t favor further asset purchases, according to the strategists. “In the current environment, we expect these comments to be mildly U.S. dollar positive,” the Barclays economists said. Dollar, Yen The dollar has appreciated 1.2 percent in the past week, according to Bloomberg Correlation-Weighted Currency Indexes. The Dollar Index, which tracks the greenback against counterparts from six major trading partners, climbed for two straight weeks until June 17, before advancing 0.3 percent to 75.200 today. The yen snapped two days of gains versus the dollar after the Finance Ministry said Japan’s exports fell 10.3 percent in May from a year earlier, adding to signs the economy may struggle to recover from the March 11 earthquake and tsunami. The median estimate of economists surveyed by Bloomberg News was for an 8.4 percent drop. “There’s a little bit of yen weakness following those export numbers,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net Candice Zachariahs in Sydney at czachariahs2@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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