Single currency pushed higher vs the dollar, which came under heavy selling pressure

The single currency made strong gains yesterday as the dollar came under pressure about its future status as the chief currency used in oil trades.

• The single currency broached two week highs as a report came through that Arab States were in secret discussion to find alternatives to using the dollar in oil trades.
  
• Major oil-producing countries have denied the report, but markets reacted strongly to the news, which has added fuel to arguments that the US currency’s global status is coming under pressure.
  
• Analysts noted that the dollar’s sharp fall was a good example of poor sentiment toward the US currency being vulnerable to speculative selling.
  
• Rallying equity markets encouraged further dollar selling, with risk appetite in the market diminishing the appeal of the haven currency.
  
• Risk was also high following the Reserve Bank of Australia’s relatively unexpected rate hike, which spurred demand for high-yielding assets, lending support to an upward movement in the euro/dollar price.