CHESSNOID

If you ever wondered what would happen if other countries started raising their interest rates while the United States keeps its interest rate at 0%, then wait no longer.  We are about to find out as the first country starts to do what is needed to shore up their economy.

Reuters:

The U.S. dollar had already been under pressure on expectations the U.S. Federal Reserve would not rush to raise its interest rates and on the growing view that the greenback has become a funding currency for carry trades.

The Reserve Bank of Australia raised its key cash rate by 25 basis points to 3.25 percent, becoming the first Group of 20 central bank to hike as the global financial crisis eases.

Analysts said other countries could begin to consider raising rates as the crisis subsided.

While the Fed and the European Central Bank may be in no hurry to raise rates, “other central banks appear more willing to reverse some of the massive monetary accommodation that has been put in place over the past year,” said Stuart Bennett, currency strategist at Calyon.

LONDON (Reuters) –

The dollar fell across the board on Tuesday while world stocks rose after Australia became the first developed economy to raise interest rates in more than a year and data showed the U.S. services sector expanded for the first time since 2008.

Gold is on the rise again against a weakening dollar too. It may break its all time high soon.