The euro climbed to the highest in almost three weeks against the dollar on prospects the European Central Bank will increase interest rates next week to curb inflation as the risk of an immediate Greek default subsides. The 17-nation currency strengthened to a 15-month high against the pound amid bets the Bank of England will be restrained in increasing interest rates compared with the ECB. Higher-yielding currencies advanced against the Swiss franc after German financial firms agreed on a draft proposal to roll over Greek debt holdings, according to people familiar with the plan. The Dollar Index weakened for a fourth day, the longest streak since April. “There’s an element of optimism after yesterday’s vote and amid headlines surrounding Germany even though specifics are lacking,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. The euro rose 0.3 percent to $1.4480 at 9:02 a.m. in New York. It earlier strengthened to $1.4521, the highest level since June 10. The euro slipped 0.3 percent versus the Japanese currency to 116.28 yen after advancing as much as 0.4 percent. The dollar fell 0.6 percent to 80.28 yen from 80.78. The euro has gained 0.6 percent against the dollar this month and is up 2.3 percent in the quarter that ends today. Greece’s Vote Luxembourg’s Jean-Claude Juncker, who leads a group of euro-area finance ministers, said the Greek parliament’s decision yesterday paves the way for payment of the next aid installment from the region’s governments and the International Monetary Fund. The Swiss franc, a traditional haven from financial turmoil, fell against 14 of 16 major peers. It depreciated 0.3 percent against the euro to 1.2082 and was little changed against the dollar 83.40 centimes per dollar, from 83.42. German firms will commit to providing financing for a Greek aid package and an announcement is planned this afternoon, said people who declined to be identified because the talks are private. The draft could still be changed during a meeting today with Finance Minister Wolfgang Schaeuble and top industry executives, the people said. Even amid the debt crisis, the euro has proved the third best performer this year, supported by the ECB’s first rate rise in three years in April. It trailed only the Swiss franc and the Norwegian krone among 17 currencies tracked by Bloomberg. Trichet Watch ECB President Jean-Claude Trichet today repeated that policy makers are in a state of “strong vigilance” ahead of the July 7 meeting, a phrase he has used before tightening monetary policy in the past. The U.S. dollar was second-worst ranked, appreciating against only the South African rand this year, as the Federal Reserve ends its $600 billion second round of quantitative easing today amid signs of a slowing recovery. More Americans than forecast filed applications for unemployment benefits last week, indicating little progress in the labor market. Jobless claims fell by 1,000 to 428,000 in the week ended June 25, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg News survey called for a drop to 420,000. IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against currencies from six major U.S. trading partners, dropped 0.3 percent to 74.502, after touching the lowest since June 14. “It’s hard for the dollar to be in an uptrend unless the economic recovery gathers real momentum in the U.S.,” said Hitoshi Asaoka, senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. Asian Currencies South Korea’s won and Taiwan’s dollar were the two best performers against the U.S. currency as regional economic expansion in Asia outpaces growth in developed markets and central banks raise interest rates. The won climbed as much as 0.9 percent to 1,067.65 per U.S. dollar, the highest in almost two months, gaining 2.7 percent for the quarter, the best performance among Asia’s 10 most- active currencies. South Korea’s factory output beat economists estimates today. Taiwan’s dollar climbed as much as 0.6 percent to NT$28.71. The Central Bank of China (Taiwan) will lift the benchmark interest rate by 12.5 basis points to 1.875 percent at a review today, according to all 18 economists surveyed by Bloomberg. Sterling weakened versus all 16 major peers as U.K. consumer confidence fell more than forecast and mortgage demand is predicted to fall in the third quarter. Pound Weaker The pound weakened for a fourth day against the euro, depreciating as much as 0.5 percent to 90.34 pence, the least since March 16, 2010. It dropped 0.3 percent versus the dollar to $1.6012, after touching less than $1.60 for the sixth successive day. The sputtering economy has investors betting the central bank will raise borrowing costs May 2012, according to forward contracts on the sterling overnight interbank average, data from Tullett Prebon Plc show. As recently as February, traders were betting on a rate increase in May of this year, the data showed. The New Zealand dollar reached a record against the U.S. currency after a survey by ANZ National Bank Ltd. showed a net 46.5 percent of companies expect the economy will improve over the next year, up from 38.3 percent in May. The net figure subtracts the number of pessimists from the number of optimists. New Zealand’s dollar rose 0.4 percent to 82.82 U.S. cents, after reaching 83.19 cents, the highest since the currency was freely floated in 1985. To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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