The dollar hit its highest in nearly three months against the yen this week

The dollar hit its highest in nearly three months against the yen this week as Treasury yields attracted buyers and Barack Obama President signed into law a bill of 858 billion U.S. dollars tax cut. The euro fell to a two-week low against the dollar on concern an agreement reached at the EU summit this week will not contain the region's problems of debt. Two reports next week are forecast to show U.S. sales new and existing homes picked up in November.

The dollar rose for a second straight week against the euro and Treasury yields reached a maximum of seven months in stronger than expected economic data and concerns about Europe's crisis extends debt-driven demand U.S. currency.

"The positive cycle is beginning to accelerate U.S. and good for the U.S. dollar," said Andrew Busch, global currency strategist at Bank of Montreal in Chicago. "Besides, we have bad news for Ireland and Greece. Things are positive for the dollar there."

The dollar rose 0.3 percent to $ 1.3188 per euro from $ 1.3226 on December 10 and touched $ 1.3133, the strongest since December 2 The dollar rose to 83.98 yen to 83.95 weeks ago and came to 84.51 yen, the highest since Sept. 24. The euro was 0.3 percent percent, at 110.77 yen, from 111.04 yen.

The dollar index, which tracks the greenback against the currencies of six major U.S. trading partners, including the euro, yen and sterling, rose 0.4 percent to 80,362, from 80,070 in October December. The euro has gained 1.6 percent against the dollar this month and the yen has fallen 0.4 percent.

Economic Indicators

Bond yields hit record highs week as reports signaling strong U.S. demand economic growth dampened by the perceived safety of debt. U.S. retail sales, producer prices and industrial production rose more than expected in November. Philadelphia region increased production this month at the fastest pace since April 2005.

Yields of 10-year Treasury reached 3.56 percent on 16 December, the highest since May 1913. U.S. Yields of 30-year bonds reached 4.6 percent, the highest since April 30.

"The dollar has strengthened since exceeded the bond market," said Yu-Dee Chang, who oversees $ 160 million in assets as chief executive of ACE Investment Strategists LLC in McLean, Virginia. "The country's highest interest rates tends to have a stronger currency."

EU leaders met 16 to 17 December in Brussels, where the treaty was agreed to modify the block to create a permanent mechanism for crisis management to enter into force in 2013, while the leaders struggled to bridge the divisions on the immediate measures to stabilize the bond market.

Germany's role

Germany, the largest European contributor to the purchase of Greece and Ireland, pushed through a proposal that would allow financial assistance "if necessary" to prop up the euro and can force bondholders to bear some costs future bailouts.

German Chancellor Angela Merkel has ruled out putting more money on the table, the reorganization after the Greek European rescue FSF so that you can buy government bonds with problems, or more intertwined European economies through the sale of joint bond.

"We're a little disappointed by their inability to address the comprehensive solution to the crisis of sovereign debt is clearly needed," said Steven Englander, chief currency strategist Group of 10 Citigroup Inc. in New York, Tom Keene. "The market is afraid of a financial breakdown of the euro area."

Moody's Steps

Moody's Investors Service yesterday downgraded the credit Ireland for five levels to Baa1 after the government was forced to seek outside help last month, staggered by losses in the banking system. The company places ratings of 16 December Ba1 foreign and local currency ratings of Greece's debt on review for possible downgrade.

sovereign debt crisis of Europe was held in late 2009 after a new government in Greece said that the budget deficit was twice the previous administration disclosed. nations of the region put together a rescue fund in May, Greece and Ireland have benefited.

The euro has fallen 9.7 percent this year, a measure of the currencies of 10 developed countries. The yen has gained 10.9 percent, while the dollar has fallen by 1 percent.

The dollar fell against most of its counterparts after the Fed said after its meeting on December 14 will maintain its asset purchase program in an effort to boost the U.S. economy.

Reference Rate

The Fed left its benchmark interest rate unchanged at zero to 0.25 percent, where it has been since December 2008.

The pound was the worst performance against all their older colleagues. The pound weakened 1.7 percent to $ 1.5533 and lost 1.4 percent to 84.91 pence per euro.

Lloyds Banking Group Plc, a British bank that is 41 percent owned by the government, said yesterday it expects to report a further impairment charge of 4.3 billion pounds (6.7 billion) due to the Irish loan losses.

The Swiss franc rose against all of its partners. It added 1.3 percent to 0.9686 against the dollar and touched 0.9559 yesterday, the strongest since Nov. 5. Which rose 1.5 percent to 1.2785 per euro and hit a record 1.2721 yesterday.

The Bank of Japan will meet December 21 to set its benchmark interest rate.

Existing home sales in the U.S. increased at an annual rate of 4.75 million in November, the National Association of Realtors will report on December 22. An independent study indicates the Commerce Department reported December 23 November sales of new homes rose at an annual rate of 300,000 from a 283,000 rate in October.