FOREX NEWS: Euro Falls to Lowest This Month Versus Dollar on Greece Bailout Deadlock

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. 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.