The euro touched a month high versus the dollar on prospects officials from the European Union will reiterate their intention to prepare a new aid package for Greece, easing concern over the region’s debt crisis.

The single currency gained versus most of its 16 major counterparts before a report that may show producer-price inflation in the trading bloc held near a 2-1/2 year high in April, backing the case for the European Central Bank to increase borrowing costs. The dollar traded 0.3 percent from a one-month low versus the yen and fell for a second day against Malaysia’s ringgit as signs of moderating U.S. growth add to the case for the Federal Reserve to keep interest rates near zero.
“The turning point was Greece, and we can suggest Greece is out of the way for the short term,” said Kurt Magnus, executive director of currency sales at Nomura Holdings Inc. in Sydney. “There’ll be fresh impetus to buy euro this week.”

The euro climbed as high as $1.4658, the strongest since May 5, before trading at $1.4639 at 1:37 p.m. in Tokyo from $1.4635 in New York on June 3. The 17-nation currency was at 117.55 yen from 117.48. The dollar bought 80.30 yen from 80.34 yen last week, when it dropped to 80.05, the weakest level since May 5.

Australia’s dollar advanced to $1.0743 from $1.0716 on June 3, when it touched $1.0775, the highest level since May 11. The ringgit rose 0.4 percent to 2.9988 per dollar, after earlier reaching 2.9948, the strongest since May 12.

EU, IMF, Greece
The euro was the biggest winner last week against nine other currencies of developed nations measured by the Bloomberg Correlation-Weighted Indexes. It rose 1.6 percent, followed by a 1.2 percent gain in the Swiss franc and a 1.1 percent advance in the Norwegian krone.
EU and International Monetary Fund officials agreed to pay the next installment to Greece under last year’s bailout, paving the way for an upgraded aid package that includes a “voluntary” role for investors. Greece said a review of the country’s economic progress concluded “positively.”
“I expect the euro group to agree to additional financing to be provided to Greece under strict conditionality,” said Jean-Claude Juncker, who leads the group of euro-area finance ministers, after meeting with Greek Prime Minister George Papandreou in Luxembourg on June 3. Juncker and Olli Rehn, EU Economic and Monetary Commissioner, are scheduled to speak in Strasbourg, France today.

European Producer Prices
The euro was also bolstered amid prospects for an improving economic recovery in the 17-nation region. Producer prices in the euro region rose 6.6 percent in April from a year earlier, after a 6.7 percent increase in March, a Bloomberg News survey of economists showed before today’s report. The March producer- price inflation rate was the highest since September 2008.

The ECB is expected to leave its 1.25 percent benchmark interest rate unchanged at its June 9 meeting, according to all 50 economists surveyed by Bloomberg.
The Dollar Index fell to a one-month low on speculation Fed policy makers will this week signal their willingness to maintain monetary stimulus following weaker-than-expected U.S. unemployment data.

Boston Fed President Eric Rosengren said on June 3 “it’s been a very slow and halting recovery” for the U.S. economy. Philadelphia Fed President Charles Plosser will speak at a panel in Helsinki today, while Fed Chairman Ben S. Bernanke is set to address bankers in Atlanta tomorrow. The Fed is completing this month its purchases of $600 billion of Treasury securities.

‘Dollar Weakening’
“The general trend of dollar weakening will continue until the Fed signals that it’s going to raise rates,” Greg Anderson, a senior currency strategist at Citigroup Inc. in New York, said.

The dollar’s best monthly performance since November may prove fleeting as a slowing American economy and falling short- term interest rates encourage investors to use the currency to fund investments in higher-yielding assets.

The U.S. currency’s value will be unchanged from current levels by year-end, down from last month’s predicted 2 percent appreciation, according to analyst forecasts compiled by Bloomberg. Bets remain tilted against the greenback even after last month’s 2.3 percent gain in IntercontinentalExchange Inc.’s Dollar Index, Commodity Futures Trading Commission data show.

Payrolls rose 54,000 in May, Labor Department data showed on June 3. That was below the median forecast for an 165,000 increase in a Bloomberg News survey. The unemployment rate unexpectedly climbed to 9.1 percent last month from 9 percent the previous month.

Dollar Index
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, fell to 73.640, its lowest level since May 5, before trading at 73.741 from 73.783 last week.

Australia’s dollar rose toward a three-week high as signs of a slowing U.S. economy supported the yield advantage of the South Pacific nation’s assets.
“We continue to see U.S. yields come under pressure, and that’s pushing the interest-rate differential back in Australia’s favor,” said Jonathan Cavenagh, a foreign-exchange strategist in Singapore at Westpac Banking Corp., Australia’s second-largest lender.

The yield premium of 10-year Treasuries over similar- maturity Australian government bonds increased to 2.22 percentage points today from 2.12 percentage points a week earlier.

The ringgit strengthened for second day as demand for the dollar waned on signs that the recovery in the world’s largest economy is slowing.