The euro declined against the dollar for the third day, heading for the first weekly drop in a month, as European Central Bank President Jean-Claude Trichet signaled a slowing pace of interest-rate increases this year. The yen climbed against all its most-traded counterparts on speculation Japanese exporters took advantage of yesterday’s biggest drop this month to buy the currency. Canada’s dollar gained after the nation’s unemployment rate unexpectedly fell in May. New Zealand’s dollar approached a record high versus the greenback after data showed China’s imports increased in May. “Because Trichet did not give the market any further indication of a series of rate hikes or that inflation had become such a problem he would have to step up the frequency, the market was disappointed to a certain extent,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp. “There was nothing really to provide the stimulus for further euro buying.” The euro has lost 1.2 percent this week and traded at $1.4456 at 8:36 a.m. in New York, from $1.4510 yesterday. The yen advanced 0.4 percent today to 80.08 per dollar after sliding 0.6 percent yesterday. It earlier reached 79.97, below 80 for a fifth straight day, the longest streak since at least 1971, according to data compiled by Bloomberg. Interest-Rate Wagers Euribor futures rose, pushing the implied yield on the March 2012 contract down four basis points to 1.93 percent, as traders reduced bets policy makers will boost rates. The euro pared its decline against the dollar as the Bundesbank raised its forecast for German growth to 3.1 percent this year. Speaking in Frankfurt today, Trichet said euro-area finances “as a whole are sound.” 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. Asked yesterday 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.” The Canadian dollar gained against 14 of 16 major counterparts after a report showed Canadian employers added 22,300 jobs last month after an increase of 58,300 in April and the jobless rate fell to 7.4 percent. Canada Jobs The loonie traded at 97.31 cents per U.S. dollar, from 97.30 cents yesterday. The currency, which headed for its first weekly gain against the dollar since April, also rallied on May 31 when the Bank of Canada said it will raise rates “eventually” as the economy recovers. The target for overnight loans between commercial banks remained at 1 percent, where it has been since September. New Zealand’s dollar, known as the kiwi, was poised for a 1.2 percent weekly advance as a bigger-than-estimated increase in China’s imports boosted the outlook for the nation’s products. The kiwi gained 0.1 percent to 82.55 U.S. cents, after yesterday reaching a record 83.02 cents. 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. The yen earlier reached the weakest level against the dollar in a week, prompting Japanese companies to repatriate earnings. Yen Demand “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. The Japanese currency also rose against higher-yielding currencies, including the Australian dollar as stocks declined, boosting demand for the yen as a refuge. The yen gained 0.6 percent to 84.93 per Australian dollar and was little changed at 66.28 per New Zealand dollar. 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. Sweden’s krona depreciated 0.6 percent to 6.2771 per dollar. It weakened 0.3 percent versus the euro to 9.0798. “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.” Norway’s krone fell 0.2 percent to 5.4336 per dollar and gained 0.1 percent to 7.8582 per euro. 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. To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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