Euro Rallies as Greece Adopts Austerity Plan Before ECB Meeting on Rates

By Catarina Saraiva and Joe Ragazzo - Jul 1, 2011 9:00 PM PT

The euro rose for the first time in four weeks against the dollar as optimism Greece will solve its sovereign-debt problems and stave off a default increased after lawmakers approved fiscal austerity measures.

The 17-nation currency strengthened the most against the Swiss franc in more than two years after Greek Prime Minister George Papandreou won approval of two bills to authorize his 78 billion-euro ($113 billion) package of budget cuts and asset sales, a key to receiving further international financial aid. The Dollar Index fell the most since January and the franc weakened against its 16 most-traded peers as investors sought higher-yielding currencies. The European Central Bank is forecast to raise interest rates next week.

“For the time being, Greece has side-stepped the specter of a disorderly debt default, so that helped to spur a rally in risky assets and that came at the expense of safe-haven destinations, such as the dollar and Swiss franc,â€