[ForexNews]

There was not much news out to drive the rally in asset markets. However, there were some indications that the G20 would not go to the limit in regulating financial markets and compensation. As well, there was a realization that shrinking imbalances is a USD negative, not a positive. In addition, the Bundesbank's Weber sounded at peace with the strong EUR: "So I think that the behavior of the foreign-exchange markets is not out of line with these developments over the recent months.” Most risk-correlated assets rallied around 3am NY time, but it was hard to pick a thematic leader. The renewed acquisition of reserves by global central banks is a major USD negative, both as a signal that the private sector is backing away from USD assets and because the pattern has been that such a surge in reserves leads to USD selling due to rebalancing.