The views of leading economist, Nouriel Roubini are starting to fade as a growing number of investors chatter about the potential for a turn in economic fortunes. Speaking on Bloomberg television earlier today, the New York University professor predicted that the PPIP won’t work well on banks that can’t pass the government’s stress test. Those banks should be put into government hands. He argues that investors have suddenly taken an overly optimistic view on banking profits and predicts further write downs as the situation worsens rather than improves. Unfortunately for Professor Roubini, the chorus of optimism is being encouraged by the loss of favor the dollar is facing. While some credit the dollar’s reversal of fortunes with an improvement of risk appetite, it’s more likely the case that fears over debasement of the U.S. unit are inaccurately being taken as a sign of growing economic health.

The sudden turn against the dollar has given room to most other currencies to rally. Currently the traditional bellwethers of rising risk, the Swiss franc, Japanese yen and the dollar, are having a torrid time as each seems to be batting on the back foot against currencies increasingly popping their heads up over the parapets looking for a chance to counter-attack.

The currency playing field continues to be uneven. Investors appear most unwilling to soften their stance against the Japanese yen, which lost ground against the 16 majors overnight. Against the dollar it’s trading at ¥98.53 and against the euro ¥133.35. On Friday data is expected to show a continued decline in consumer spending in the form of weakening retail sales. Also, the Tankan survey of business sentiment is due to show its worst reading in 30 years at minus 55, indicating sumo-style corporate pessimism.

While one can understand the desire to shoot at the Japanese yen with this easy prey data in the crosshair, investors are extremely reluctant to afford any of the optimism surrounding global recovery to export-led Japan. Rather they seem more willing to step up their appetite for other Asian nations’ currencies, which take the double benefit of the ailing U.S. dollar and a continued rally in equity markets. Investors appear to be ahead of the game in guessing the impact of a double dose of fiscal and monetary stimulus, which they expect to kick-in throughout the second half of this year. For now the odds appear stacked against the dollar and investors can see easy gains to be had in buying the rebound.

The Japanese situation is also at odds with that of Britain, where the pound is didn’t react too badly to further indication through excessively weak retail sales that the economic storm clouds are darkening. The pound is a little lower at $1.4495 yet today has risen against the Japanese unit to buy ¥142.90. The 1.9% monthly decline in British shopping habits is the largest decline since June last year.

The dollar is making some headway against the euro currency today following two reports. A heady weekly jobless claim number is high enough to support the theory that a double-digit unemployment rate is a done deal before the end of the summer. The 6.3% fourth-quarter GDP contraction was slightly below the consensus 6.6% expectation with many onlookers tipping their hat on a gamble that this data will mark the deepest point of the slowdown. At $1.3551 this morning the dollar has added around one half of a cent.