Currencies
Buy the euro or sell the dollar - that is the question.
Traders spent half the week waiting for the Fed to make its move. And then when it did move, they spent the second half trying to figure out what to do next. What traders did react to was the stream of weak U.S. economic reports. However, analysts feel that it will take stellar economic reports out of the EMU, and not just weak U.S. data, before the euro can resume its rise against the dollar. Traders continue to vacillate on the euro - to buy or nor to buy. Traders readily admit they haven't really found reasons to purchase the euro. Rather they are trading dollars and are reluctant to switch just yet.

The yen seems to live in a world of its own. With Japan's economy weak (despite stronger than expected industrial production) one wonders why the yen appears to be strong. The yen is already being affected by repatriation flows that generally occur prior to fiscal year end on March 31. Exporters traditionally bring profits home in the last quarter by trying to take advantage of relatively favorable exchange rates. As a result, this demand sometimes has the affect of raising the yen's value. A relatively new wrinkle in the yen-dollar relationship is cross trading with the euro, which is affecting the yen-dollar rate as well. With continuing weak economic data expected and a falling Nikkei, analysts expect the yen to decline (more yen per dollar). At this juncture, the weakness in the United States is being played out in the euro dollar market.

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