raising the Euro For a third day against the dollar.

The euro rose for a third day against the dollar amid optimism the rescue of Ireland to limit the spread in the largest debt markets in Europe.

The dollar weakened against 14 of its 16 most actively traded peers as Federal Reserve chairman, Ben S. Bernanke defended the central bank's policy U.S. monetary stimulus. The 16-nation euro, which is headed for a weekly gain versus the yen was also supported as a report showed German producer prices rose more than forecast by economists. The yen rose against the Australian dollar, snapping a two-day decline, on speculation that China will raise interest rates to curb inflation.

"Ireland appears close to a deal on its rescue plan, which is positive for sentiment," said Neil Jones, director of European sales of hedge funds Mizuho Corporate Bank Ltd. in London. "The German economy is driving the future. Data stronger than expected German PPI supports the euro in the short term."

The currency of 16 countries rose 0.4 percent to $ 1.3702 at 10:08 am in London from $ 1.3643 yesterday in New York. The euro traded at 114.02 yen compared with 113.95 yen yesterday and 113.02 a week ago.

Japan's currency strengthened 0.3 percent to 83.24 per dollar, having fallen to 83.79 hours, its lowest level since October 5. The yen was set for a decline of 0.9 percent against the dollar this week. The Japanese currency strengthened to 82.27 per Australian dollar from 82.68.

German prices

German producer prices gained 4.3 percent in October from a year earlier, after rising 3.9 percent in September, the Federal Statistics Office reported today. The median estimate of economists surveyed by us was for an increase of 4.1 percent.

central bank governor of Ireland, Patrick Honohan, said he hopes his country will seek a package worth "tens of billions" of euros to help rescue banks battered by the slump in U.S. housing. Officials of the European Union, International Monetary Fund and European Central Bank yesterday started studying the books of banks.

"Progress toward a possible loan package for Ireland in the EU and the IMF is helping to buoy market sentiment," said Khoon Goh, market economics and chief strategist at ANZ National Bank Ltd. in Wellington. "This is likely to be positive for the euro."

The euro has gained 1.9 percent in the last three months to an extent of 10 pairs of developed countries, currency indexes weighted Correlation-show. The dollar has fallen 5.3 percent, while the yen has fallen 2.6 percent, according to the indexes.

Bernanke, the dollar

The dollar index, which IntercontinentalExchange Inc. uses to track the dollar against the currencies of six U.S. trading partners, fell for the third consecutive day, losing 0.4 percent to 78.283.

Bernanke, Fed chairman took his defense of the central bank's monetary incentives abroad, saying it would help the world economy, and implicitly criticized China for keeping its currency weak.

The best way to support the dollar and the global recovery support is through policies that lead to the resumption of robust growth in an environment of price stability in the United States, "Bernanke said in remarks prepared for a conference this afternoon in Frankfurt. The countries that undervalue their currency can inhibit the growth of worldwide financial instability and risk in the home, he said.

The Fed said November 3 will buy $ 600 billion in treasury bonds to stimulate employment and inflation in a second round of a policy known as quantitative easing. The Central Bank purchased $ 1,700,000,000,000 of Treasury bonds and mortgage debt under a previous program that ended in March.

China tighten

"The dollar suffered a sharp after Bernanke's reiteration of QE," Jones said of Mizuho. "The Fed will meet at least the program, and can even extend it to $ 1 billion. It also helped the euro."

The yen strengthened against most higher-yielding currencies as banks nine analysts surveyed by reporters this week said the People's Bank of China would increase the rate last month by the end of the year.

"There is talk that China's central bank could raise rates as early as today, which seems to be a weight on risk appetite," said Takashi Kudo, general director of market information service of NTT SmartTrade Inc., a unit Nippon Telegraph & Telephone Corp. in Tokyo. "This is probably positive for safe haven currencies like the yen and the dollar."

China's inflation

Concern that rising consumer prices in China, which grew more than two years in October, will jeopardize the economy prompted Premier Wen Jiabao, to hold a cabinet meeting on the issue this week. China Securities Journal reported today that inflation in China could reach 3.8 percent in the fourth quarter, citing estimates by the State Information Center.

The dollar headed for a third week gain against the yen as the U.S. economy grew at a rate of 2.4 percent per year in the third quarter, compared with an increase of 2 percent initially reported, according to economists surveyed by reporters before the data by 23 November. bond yields to 10 years have increased eight basis points, or 0.08 percentage point to 2.87 percent this week.

"The backup in yields surprising the U.S. is putting yen under pressure," wrote Calvin Tse, a currency strategist in London at Morgan Stanley in a research note yesterday. "Dollar-yen has a very strong correlation with U.S. rates."
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