The euro declined versus the dollar, headed for the first weekly drop in four, amid dimming prospects the European Central Bank will slow the pace of interest-rate increases this year. The common currency fell against 12 of its 16 major peers tracked by Bloomberg on concern a resolution to Europe’s sovereign-debt crisis will be delayed after ECB Bank President Jean-Claude Trichet rejected any direct participation in a second bailout for Greece. New Zealand’s dollar was 0.6 percent from a record high after data showed China’s imports increased in May. The yen climbed against all its main counterparts on speculation Japanese exporters took advantage of yesterday’s biggest drop this month to buy the currency. "There’s been a moderation in interest-rate expectations after Trichet’s speech, despite his reiteration of ‘strong vigilance,’" said Adam Myers, a senior foreign-exchange strategist at Credit Agricole Corporate & Investment Bank in London. "The market thinks the ECB will deliver its July tightening, the vigilance component of the statement, but what’s important for euro-dollar is expectations going into next year." The euro has lost 1.2 percent this week and traded at $1.4456 as of 9:02 a.m. in London, from $1.4510 in New York yesterday. The yen advanced 0.4 percent today to 80.04 per dollar after sliding 0.6 percent yesterday. New Zealand’s dollar was little changed at 82.35 U.S. cents, after yesterday reaching a record 83.02 cents. Trichet to Speak Trichet will speak in Frankfurt today after the central bank yesterday left its inflation forecast for next year unchanged at 1.7 percent while he signaled the bank intends to lift the benchmark interest rate in July. “I see a bigger chance for the euro to decline,” said Yuji Kameoka, chief currency strategist in Tokyo at Daiwa Securities Capital Markets Co., a unit of Japan’s second-biggest brokerage. “People expect the ECB to be on hold after raising rates in July.” Asked if the ECB would roll over its own holdings of Greek government bonds if private investors agreed to do so, Trichet said that is “certainly not our intention.” New Zealand’s dollar, known as the kiwi, was poised for a weekly advance as a bigger-than-estimated increase in China’s imports boosted the outlook for the nation’s products. Chinese Imports China’s imports jumped 28.4 percent in May from a year earlier, the biggest gain since January, the government reported today. Economists had forecast a 22 percent increase. China is New Zealand’s second-biggest export market. “It’s important to notice China’s imports are rising because it’s definitely a good sign,” said Thomas Harr, head of Asian foreign-exchange strategy at Standard Chartered Plc in Singapore. The data are “modestly positive for commodity currencies.” The kiwi has risen 1 percent in the past five days after a 0.4 percent drop the prior week. The yen earlier reached the weakest level against the dollar in a week, prompting Japanese companies to repatriate earnings. “Exporters are selling the dollar and buying the yen,” said Takashi Kudo, senior manager of the foreign-exchange division support center in Tokyo at NTT SmartTrade Inc., a unit of Japan’s largest phone company. Aussie, Nordics The Japanese currency also rose against the higher-yielding currencies including the Australian dollar as Asian stocks reversed earlier gains, boosting demand for the yen as a refuge. The Stoxx Europe 600 Index of shares was 0.5 percent lower and the MSCI Asia Pacific Index of regional shares slipped 0.2 percent after rising as much as 0.7 percent. The yen gained 0.6 percent to 84.87 per Australian dollar and 0.5 percent to 65.92 per New Zealand dollar. Norway’s krone and Sweden’s krona weakened after ECB policy makers yesterday revised their forecasts for economic growth. The Frankfurt-based central bank sees gross domestic product in the euro region expand by 0.6 percent to 2.8 percent in 2012, from a previous range of 0.8 percent to 2.8 percent. The krone weakened 0.3 percent versus the dollar to 5.4386. The Norwegian currency weakened 0.1 percent to 7.8632 per euro. Sweden’s krona depreciated 0.6 percent to 6.2769 per dollar. It weakened 0.4 percent versus the euro to 9.0848. U.S. Economy “Recent weakness in the Nordic currencies appears to be based on concerns regarding the European growth outlook,” Myers said. “Sweden has a large export exposure to European markets. Norway, as an oil exporter, is somewhat insulated in terms of its exports.” Losses in the euro against the dollar were limited on speculation the U.S. economic recovery will falter, adding to the case for the Federal Reserve to keep interest rates low. The Fed will “continue to use its policy tools to support economic recovery and carry out its dual mandate to foster maximum employment in the context of price stability,” Fed Vice Chairman Janet Yellen said in remarks at a Cleveland Fed policy conference yesterday. Retail sales in the U.S. declined 0.4 percent in May, after a 0.5 percent increase in April, according to a Bloomberg News survey of economists before the June 14 data. The consumer-price index rose 0.1 percent in May, after a 0.4 percent gain in April, a separate Bloomberg survey showed before the report on June 15. Record monetary stimulus is still needed to boost a “frustratingly slow” U.S. economic recovery, Fed Chairman Ben S. Bernanke said on June 7. The central bank’s $600 billion bond-purchase program, which helped drive its balance sheet to a record, will end this month. Interest-rate futures contracts on the Chicago Board of Trade yesterday showed a 23 percent chance U.S. policy makers will increase the target lending rate by March, down from odds of 33 percent a month earlier. To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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