June 26 (Bloomberg) -- The dollar fell, heading for its biggest weekly loss against the euro in a month, as Asian stocks rose for a third day and traders added to bets the Federal Reserve will keep interest rates low. The dollar slid against 12 of the 16 major currencies as Dallas Fed President Richard Fisher may today elaborate on the central bank’s statement this week that the benchmark rate will stay at “exceptionally low levels.” Australia’s dollar climbed for a fourth day against the yen as commodity prices rose, aiding demand for the nation’s assets. New Zealand’s dollar fell after the government said its economy shrank at a faster pace. “Gains in stocks are pumping capital into markets,” said Masaki Fukui, a senior market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender by assets. “The recent risk aversion strengthened the dollar as a refuge but as risk appetite rebounds, higher- yielding currencies seem to be benefiting.” The dollar declined to $1.4032 per euro as of 6:51 a.m. in London from $1.3988 yesterday in New York, extending its loss this week to 0.7 percent. The yen fell to 134.61 per euro from 134.22. The U.S. currency traded at 95.93 yen from 95.95 yen. Australia’s dollar rose 0.2 percent to 80.44 U.S. cents and climbed 0.2 percent to 77.17 yen. The British pound advanced 0.1 percent to $1.6388. Asian currencies were led higher by the Indonesian rupiah as regional equities gained. The Nikkei 225 Stock Average rose 1 percent, climbing for a third day, and the MSCI Asia-Pacific Index of regional shares advanced 1.4 percent. The rupiah strengthened 1 percent to 10,180 versus the dollar. Australian Dollar Australia’s currency strengthened as gold advanced for a fourth day, adding 0.3 percent, and crude oil rose 0.7 percent. Gold is Australia’s third-most valuable raw material export, and crude oil is its fourth. “We had a strong performance in commodity prices,” said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney. “Equities also performed very well, which is very supportive of investors’ sentiment generally” to seek higher- yielding currencies. The Australian dollar climbed against 12 of the 16 most- traded currencies after the International Monetary Fund on June 24 raised its outlook for the economy, saying it will shrink less than forecast this year and grow at more than double the expected pace in 2010. The Organization for Economic Cooperation and Development also increased its estimate for growth among its 30 member nations for the first time in two years. Benchmark interest rates are 0.1 percent in Japan and as low as zero in the U.S., compared with 3 percent in Australia, making the South Pacific nation’s assets more attractive. Rate Bets The U.S. central bank held the target rate for overnight lending between banks in a range of zero to 0.25 percent for a fourth meeting on June 24. The Fed’s Fisher will speak at noon in Dallas. Traders see a 34 percent chance the U.S. central bank will increase its target rate by the end of the year, down from 50 percent odds a week ago, according to futures on the Chicago Board of Trade. The yen headed for a weekly decline against the euro as signs the global recession is waning increased speculation that Japanese employees will use their summer bonuses to buy higher- yielding assets abroad. Finance companies in Japan are looking to raise 520 billion yen ($5.4 billion) for mutual funds focused on foreign assets this week, according to data compiled by Bloomberg. “Risk-taking appetite among investors is improving,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-biggest bank. “The bias is to sell the yen.” Summer Bonuses Large companies in Japan will pay this month an average of 754,009 yen in summer bonuses, according to data from the Japan Business Federation. Japanese firms pay bonuses twice a year. Japanese investors bought 336.1 billion yen more foreign bonds, stocks and short-term securities than they sold in the week ended June 20, the Ministry of Finance reported yesterday. The yen lost 0.2 percent against the euro this week, extending its loss this quarter to 2.6 percent. Europe’s single currency was poised for a weekly advance versus the dollar on speculation companies in the 16-nation region will bring home overseas earnings before the end of the second quarter. Repatriation Flows “It’s end of the quarter and the half year, so repatriation flows are expected to emerge that will likely support the euro,” said Motonari Ogawa, director of currency trading in Tokyo at Barclays Capital, the world’s third-largest foreign-exchange trader. The European Central Bank said on June 24 it will lend banks 442 billion euros ($621 billion) for 12 months, the most ever allocated in an auction, to unlock credit markets. It has been lending banks as much money as they want against eligible collateral for up to six months since October last year. New Zealand’s dollar weakened 0.3 percent to 64.37 U.S. cents after the statistics bureau said gross domestic product declined 1 percent in the first quarter. That exceeded the median estimate for a 0.7 percent contraction in a Bloomberg News survey of 11 economists. “This is the fifth negative quarter and the second quarter is also on track for a drop so the green shoots in the New Zealand economy are fragile,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “Data like this does support Reserve Bank of New Zealand Governor Alan Bollard’s warning that benchmark rates may still come down and will remain low for some time.”

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