* Worries about Irish debt crisis diminish
* Bernanke defends QE, shows no sign of backing off
* Markets keeping eye on China for any rate moves
* Aussie dips as HK and Shanghai shares falter
By Ian Chua and Hideyuki Sano
SYDNEY/TOKYO, Nov 19 (Reuters) - The euro dipped on Friday
but held onto most of its recent gains on budding hopes that
Ireland is near a deal to shore up its banks and budget deficit,
while the Australian dollar slipped as Chinese shares came under
pressure.
The euro briefly got a marginal boost after Federal Reserve
Chairman Ben Bernanke gave a full-throated defence against
criticism of the bank's controversial bond-buying programme,
showing no signs of backing away from implementing the plan.
Worries that China may adopt more stringent measures to keep
a lid on inflation, including a drastic rise in key interest
rates, dragged shares in Shanghai and Hong Kong lower and
weighed on the Australian dollar <AUD=D4>, which fell 0.5
percent on the day to $0.9847.
The euro was clinging to most of the gains it built up since
bouncing from Tuesday's seven-week low, trading at $1.3628
<EUR=> down 0.1 percent on the day but up more than 1 percent
from Tuesday's trough around $1.3446 on trading platform EBS.
"I feel that the worst for the euro is over," said a trader
at a U.S. bank. With its fall to a seven-week low, the euro had
given back half of its gains from late August to Nov. 4.
"The last time the euro was in an adjustment, in August, it
rebounded after achieving a 50 percent retracement," the trader
added.
The euro's drop earlier in the week stalled right above
$1.3436, the 50 percent retracement of its August to November
rally.
The single currency still needs to get above resistance at
$1.3750/1.3785, however, to put an end to the downward
correction of the last couple of weeks.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Take a Look on Ireland crisis: []
Graphic on euro zone's struggle with debt:
http://r.reuters.com/hyb65p
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UPBEAT DATA
The euro fell 0.3 percent to 113.60 yen <EURJPY=R>,
recovering from the week's low of 112.27 yen hit on Tuesday.
The dollar eased 0.2 percent to 83.39 yen <JPY=> but
remained in sight of a six-week high of 83.79 yen marked on
Thursday, helped by upbeat U.S. economic data showing factory
activity in the Mid-Atlantic region accelerated in November, and
by a closely watched gauge of jobless benefits falling to a
two-year low. []
"It's just a case of continued position unwinding before
Thanksgiving," said a trader for a Japanese bank, referring to
the dollar's recent rise against the yen.
A drop in dollar/yen option volatilities also lent support
to the greenback, which may test 85 yen next week, the trader
said.
Short-term dollar/yen option volatilities have fallen ahead
of next week's Japanese and U.S. holidays. They were also
pressured by the yen's drop on crosses on Thursday, said an
options trader for a major Japanese bank.
The bid rate for one-month dollar/yen implied volatility
fell to 9.75 percent <JPY1MO=> at one point on Friday, the
lowest in more than six months, according to Reuters data.
The dollar faces resistance in the 83.80 yen to 84.00 yen
area, right around the top of a downtrend channel and the
dollar's Oct 5 high of 83.99 yen. A clear breach of 84.00 yen
could open the way for a rise to 85.00 yen.
Sparking hopes of imminent aid for Ireland's shattered
banks, central bank governor Patrick Honohan said he expected
Dublin to receive tens of billions of euros in loans from
European partners and the IMF to provide stand-by funds.
Fed chairman Bernanke also reiterated the case for the Fed
to act now in the text of a speech for delivery to a conference
at the European Central Bank in Frankfurt later in the day. The
text was released ahead of his scheduled Friday appearance.
[]
While there was little surprising in Bernanke's comments,
some traders said they helped to push down the dollar as they
showed no signs of budging on quantitative easing despite
growing frustration over the policy both at home and abroad.
(Additional reporting by Masayuki Kitano in Tokyo, Reuters FX
analyst Krishna Kumar in Sydney; Editing by Joseph Radford)
