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"Suddenly the dollar isn\u2019t the world\u2019s most hated currency.\nThe greenback surged again vs. the euro Tuesday,\u00A0following another round of stronger-than-expected U.S. economic data and some sobering words from Europe\u2019s top political leader.\n\n  \nTry blaming Bernanke for this one\nThe euro was worth $1.34, down 2 cents from Monday\u2019s close, after German chancellor Angela Merkel said in a speech that the European Union\u2019s plan to bail out Ireland puts the European currency in \u201Can extraordinarily serious situation.\u201D\nThe euro\u2019s tumble comes even as Merkel, her finance minister Wolfgang Sch\u00E4uble, various wags from China and practically the entire Republican party have come out against the Fed\u2019s second round of quantitative easing, claiming it will crush the dollar and ignite inflation.\nYet the euro has lost 6% of its value against the dollar since hitting a recent high Nov. 4, the day Fed chief Ben Bernanke published his explanation of the Federal Reserve\u2019s decision to buy as much as $600 billion worth of Treasury bonds over eight months to boost U.S. demand for goods and services.\nOne reason for Tuesday\u2019s dollar rally is that a stronger-than-expected revised gross domestic product report shows the economy expanded more than expected in the third quarter, potentially easing pressure on Bernanke to follow through on his promises.\n\u201CGood U.S. data &amp;#8230; is good for the U.S. dollar as was proven after last week\u2019s Philly Fed survey, as data weakens the case for buying the entire $600 bln in QE2,\u201D CMC Markets strategist Ashraf Laidi wrote in a note to clients.\nThe euro has tumbled amid worries that a bailout of Ireland, being arranged in part to prop up the country\u2019s hemorrhaging banking sector, will make it necessary to rescue Portugal as well.\nA rescue of Portugal wouldn\u2019t break the bank, but observers worry that much bigger Spain \u2013 whose staggering economy accounts for a tenth of euro zone economic output \u2013 could come next. Merkel and others have been arguing that taxpayers shouldn\u2019t have to foot all these bills, but efforts to get bondholders to pay their share haven\u2019t gone down easily.\nSchauble said Tuesday the fate of the euro is \u201Cat stake\u201D in the Irish bailout. Accordingly, some observers say there are signs the euro selloff is only just getting started.\nJohn Higgins at Capital Economics writes that the Bernanke backlash selloff of the dollar seems to have run its course. That gives investors much more time to consider Germany\u2019s uncertain role in supporting the euro project, and to mull over how many chances they really want to be taking between now and year-end in a world economy whose outlook isn\u2019t likely to clear up any time soon.\n\u201CWe expect the euro to lose ground as investors\u2019 enthusiasm for risk begins to wane,\u201D he writes in a note to clients Tuesday. \u201CNot only is this likely to be partly triggered by growing anxiety about the euro-zone\u2019s fiscal crisis itself. But the boost to asset prices from the Fed\u2019s adoption of additional monetary stimulus should also fade, if it hasn\u2019t already.\u201D"^^<http://www.w3.org/2001/XMLSchema#string>
<http://fortune.com/2010/11/23/dollar-soars-as-euro-crisis-deepens/>