Currencies
The euro oozed down in thin pre-holiday trading despite an even stronger-than-expected March German Ifo business climate index that suggested things might be stabilizing there. The disappointing currency market response suggests that positioning is outweighing any economic benefits for now. And as the foreign exchange adage goes, if a currency does not rise on positive economic news or fall on negative news that in itself becomes a reason to buy or sell it in the short term. Market players are still betting on the dollar because expectations are that the United States will recover sooner and grow faster than the EMU.

The yen loped towards its fiscal year-end and gained some ground against the dollar, possibly on last minute repatriation of overseas profits. Market players wonder what will happen now that the fiscal year machinations have ended. Will the investment inflows that occurred in March be reversed in April now that window dressing is complete?

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