The last trading day in the first quarter of 2009 has ended with a bang. The U.S. dollar sold off against most of the major currencies as repatriation flows come to an end. U.S. economic data was weak, but not a game changer and therefore currency investors chose instead to focus on the positive implications of Japan’s stimulus package and the IRS’ new tax break for U.S. car buyers. The currencies that are performing the best against the U.S. dollar are the ones whose central banks are not expected to adopt quantitative easing, namely the Australian New Zealand dollar.

Dollar rallied strongly on the opening day of the first full working week of the year as enthusiasm over President elect Obama stimulus package pushed the unit higher against the yen while the euro suffered a 300 point loss on worries over the burgeoning Italian bond scandal. According to the Independent in UK , Italian municipalities may face as much as $35 Billion in losses over a financing scheme gone wrong, sold to the them by major investment banks such as UBS and Deutsche Bank. The Italian authorities are considering the possibility of suing the principal market makers or misrepresenting the risks to the municipal investors in these complex over the counter deals.