The euro weakened against the yen and the Swiss franc amid speculation a European Union pledge to stabilize the region’s economy won’t resolve a sovereign-debt crisis. The 17-nation currency rose against the dollar after the Ifo index of German business confidence unexpectedly increased, curbing demand for the safety of U.S. assets. EU leaders vowed to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of austerity measures next week. European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo said the end of the crisis won’t happen soon. “The ball is in Greece’s court and it’s difficult for the market to rally until we know it has won the point,” said Steve Barrow, London-based head of research for Group-of-10 currencies at Standard Bank Plc in London. “Our favorite way to play the euro weakness would be short euro against the Swiss franc.” The euro fell 0.7 percent to 114.02 yen as of 11:36 a.m. in London. The shared currency was 0.6 percent weaker at 1.1881 Swiss francs, after reaching a record-low 1.1846 yesterday. The Dollar Index, which tracks the U.S. currency against those of six major trading partners, fell 0.1 percent. The dollar was 0.3 percent stronger against the euro at $1.4215, and depreciated 0.3 percent to 80.21 yen. Budget Cuts EU leaders urged Greece to pass a package of budget cuts and vowed to do what’s needed to meet the country’s financing needs, the group said in a statement in Brussels yesterday. Greek lawmakers must approve the 78 billion-euro package in a vote next week, a condition for receiving a fifth loan payment under an existing bailout and for future financing. Failure to secure aid would push Greece to the brink of default, with the country needing the funds to cover 6.6 billion euros of maturing bonds in August. European finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment. “We will follow very carefully what is being done,” European Central Bank President Jean-Claude Trichet told reporters yesterday after the first day of the EU leaders summit in Brussels, which concludes today. Morgan Stanley strategists advised selling the euro against the dollar, betting it will weaken to $1.36. ‘Hurdles Remain’ “Despite the progress currently being made regarding providing aid packages to Greece, many hurdles still remain and uncertainty looks set to remain at elevated levels,” a team led by Hans Redeker, head of foreign-exchange strategy, wrote in an e-mailed report. “Meanwhile, the economic picture in Europe also looks like it is starting to deteriorate.” The Ifo institute said its business climate index for June, based on a survey of 7,000 executives, increased to 114.5 in June from 114.2 in May, confounding economist forecasts for a drop to 113.4. U.S. orders for durable goods, those designed to last at least three years, increased 1.5 percent in May after dropping 3.6 percent the prior month, economists surveyed by Bloomberg said ahead of the Commerce Department data. Bookings for non- defense capital goods excluding aircraft gained 1 percent last month after falling in April, a separate survey showed. The Federal Reserve decided on June 22 to keep the central bank’s balance sheet at a record to support an economic recovery after completing $600 billion of bond purchases this month. To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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