Euro Advances Versus Dollar as Greece Passes Austerity, ECB Meeting Nears

The euro reached two-week high against the dollar as investors raised bets the European Central Bank will increase interest rates next week after the passage of austerity measures by Greek lawmakers.

The 17-nation currency also gained against the Swiss franc and South Africa’s rand after Greek Prime Minister George Papandreou garnered enough votes for his 78 billion euro ($112 billion) package of budget cuts and state asset sales needed to tap a fifth portion of last year’s rescue. The dollar sank as stocks and commodities rose amid reduced concern about the European debt crisis, buoying risk demand. Canada’s dollar rallied as consumer prices increased more than forecast.

“With the vote out of the way for the time being, we should see a renewed focus on ECB hawkishness,” said Ray Attrill, a New York-based currency strategist for BNP Paribas SA. “Institutional investors have been very sidelined in the last few weeks because of the uncertainty leading up to the vote. If the air was cleared for the time being on Greece, that paves the way for a resumption of delayed euro-dollar buying.”

The shared currency rose 0.4 percent to $1.4422 at 12:37 p.m. in New York, from 1.4371 yesterday. It gained as much as 0.5 percent to the strongest since June 15. The euro was little changed against the yen at 116.64. The dollar fell 0.3 percent to 80.87 yen.