The euro halted a three-day slide against the yen after a report showed German investor confidence in April increased to the highest level in almost two years. The euro also snapped a five-day decline versus the dollar after the ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations turned positive for the first time in almost two years. Canada’s dollar touched a three-week low against its U.S. counterpart after the nation’s central bank unexpectedly cut its benchmark interest rate to a record-low 0.25 percent. “The ZEW survey was much, much stronger than expected,” said Roberto Mialich, a currency strategist at UniCredit Markets & Investment Banking in Milan. “The first reaction was a spike in the euro but one survey doesn’t change the negative trend.” The euro rose 0.2 percent to 126.70 yen as of 9:30 a.m. in New York, from 126.48 yen yesterday. Against the dollar, it traded at $1.2935, from $1.2921 yesterday, and after reaching $1.2990 earlier. The U.S. currency was at 97.92 yen, from 97.89 yen. The Canadian currency weakened 0.8 percent to C$1.2495, after touching C$1.2498, the lowest since April 2. The yen fell against 11 of the 16 most traded on concern data tomorrow will show Japan posted a trade deficit for the fifth time in six months. The euro pared gains as stocks declined. The Swedish krona gained 0.7 percent to 11.15 per euro after the Riksbank cut the nation’s benchmark interest rate by half a percentage point to 0.5 percent, less than some analysts predicted, and refrained from buying bonds to revive the economy. Twelve out of 21 economists in a Bloomberg survey forecast the reduction while the rest predicted a bigger cut. ZEW Index “The markets had definitely priced a more dovish outcome for the meeting,” said Carl Hammer, a senior global macroeconomic analyst in Stockholm at SEB AB. The euro climbed from the lowest level in a month against the dollar after the ZEW index rose to 13, from minus 3.5 in March. That’s the highest level since June 2007. Economists expected a gain to 2, according to the median of 35 forecasts in a Bloomberg News survey. “The result would need to be treated with caution,” Geoffrey Yu, a currency strategist in London at UBS AG, wrote in a note to clients today. “The euro is continuing to suffer from risk aversion and expectations of a major change in ECB policy, largely imposed on the central bank by deteriorating internal and external conditions.” A gauge of German business confidence in April is forecast to be 82.3, close to the lowest level in more than 26 years, the Ifo institute in Munich will probably say on April 24, according to a Bloomberg survey. Bank Earnings The euro pared its gains versus the dollar after Bank of New York Mellon Corp. said reported first-quarter earnings that fell short of analysts’ estimates, spurring demand for the U.S. currency as a safe haven. The euro lost 1 percent versus the dollar yesterday and weakened beyond $1.29 for the first time in a month after as shares of Bank of America Corp. and Citigroup Inc. tumbled on renewed concern banking losses will deepen. The 16-nation European currency has lost 5 percent against the dollar in the past month on concern the European Central Bank policy makers will be struggling to come up with new measures to combat the recession. The ECB next meets May 7. ECB Speculation “There’s a good chance they will disclose the purchase of corporate bonds denominated in euros,” said Michael Woolfolk, a New York-based senior currency strategist at Bank of New York Mellon, said in an interview on Bloomberg Television in Hong Kong. “Such move would likely undermine the euro, and we could see a test around $1.25 level before the end of May.” The yen snapped three days of gains against the euro and the dollar before a government report tomorrow that may show Japan had a trade deficit of 27 billion yen ($275 million) in March, according to a Bloomberg News survey of economists. “There’s a sense the yen has been overbought,” said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest bank. “Market participants are probably unwinding long yen positions.” A long position is a bet an asset will gain.

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