The greenback came under an accumulated pressure today with an independent newspaper article talking about a tending of the Persian gulf counties in a push from China, Russia and France to turn its sales of oil into other currencies and adopting a basket of currencies as a reserve instead of the greenback in evaluating their currencies for avoiding the US economic problems impacts which have dragged their economies down to a credit crisis has not been seen since great depression. The article could contain the market sentiment pushing the oil and gold up versus the weakening greenback increasing the market worries about the inflation outlook and the dependence on the greenback and the negative impact on the asking for the US treasuries.

From another Side the Australian central bank has surprised the market by its decision of hiking the interest rate by .25% to be 3.25% in the first tightening action after the credit crisis by one of the major global economies in the world. The RBA has seen that there is a materialized improving in the current economic conditions which is stimulated by the Chinese growth and demand for the Australian exports which is mainly the raw materials. The ties between the Chinese economy and the Australian economy were working in this way in the recent decades which could cap the negative impacts of the credit crisis on the Australian economy in favor of the Chinese demand. The surprising action plus the robust of gold prices could push the Australian dollar today above .89 versus the greenback which was under the pressure of the market optimism which triggered after this central bank action.

In spite of that, the British pound was the great loser today by very disappointing releases of UK manufacturing productions and industrial productions of August. The first slumped by 1.9% m/m and 11.3% yearly while they were forecasted to be up monthly by .3% and down yearly by just 9.3% and the second have fallen y/y by 11.2% while the market was waiting to have a declining by just 8.8% and while they have come down monthly by 2.5%, the market was waiting for increasing by .1%. these data have dampen the British pound today dragging it from above 1.6 to below 1.59 during the European session as the data brought back the probabilities of further easing actions by the BOE to stimulate this current struggling economy  before easing to the spot of the investors who started later in the session to put weights on the greenback easing the pressure on the British pound in an improving wave of the market risk appetite pushing the stocks up hoping for a closer recovery signs than what was expected..

Best wishes

FX Consultant
Walid Salah El Din