FT.com | Central banks shift reserves away from US

"Central banks are shifting reserves away from the US and towards the eurozone in a move that looks set to deepen the Bush administration's difficulties in financing its ballooning current account deficit.

[...]

Any rebalancing of central bank reserve portfolios has serious implications for the global financial system as the US has become increasingly dependent on official flows of funds to finance its current account deficit, estimated at $650bn in 2004."

This is certainly bad news, albeit expected, for the US economy. The current local highs for the USD against the EUR may just be the calm before the storm. It may just all depend upon the US receiving continual bailouts from China and Japan.