Reflation elation was the story on Monday as Friday’s jitters were a thing of the past. An upbeat view on emerging markets helped underpin the trade as India returned the Congress party to power with a near majority (sparking a 17% jump in its main share index) and China indicated a second stimulus package could be unveiled if needed.

The US housing sector got a boost from news that home improvement retailer Lowes reported strong earning. Sentiment among home-builders rose as well.

EUR/USD ended the session on its highs, retracing better than 38.2% of it’s dip from 1.3720 to 1.3425 early today. It traded as high as 1.3555 late.

USD/JPY was boosted by comments from an MOF official commenting on the undesirability of JPY strength. Also helping was news this afternoon that that the BOJ is mulling taking foreign bonds as collateral. This will help the dollar in times of stress as Japanese investors will not necessarily need to repatriate to use their Treasuries as collateral. USD/JPY reached 96.46 and close near session highs.

EUR/JPY snapped a downtrend in place for a week and raced as high as 130.66.

Cable ended near its recent highs, a mere 30 pips or so from the 1.5370 top in January. AUD and CAD were boosted, as one would expect, ending at 0.7665 and 1.1626 respectively.