Australian dollar hits 1-year high as central bank hikes rates NEW YORK (MarketWatch) -- The dollar moved back towards its lowest level in a year versus most major rivals Tuesday, weighed down in part by a British newspaper report that Gulf oil producers, in concert with China, Russia, Japan and France are planning to eventually end pricing oil in dollars. The report in the Independent newspaper was denied by top finance officials, giving the dollar a small, but temporary, lift but analysts said it remained the excuse for dollar selling. Read more on possible oil-price changes. Also grabbing attention in the currency markets, the Australian dollar jumped after the nation's central bank became the first nation in the Group of 20 to increased interest rates. The euro traded at $1.4729 against the U.S. dollar, up from $1.4657 in North American trade Monday afternoon. The dollar index (DXY 76.31, -0.33, -0.44%) , a measure of the greenback against a trade-weighted basket of currencies, fell to 76.270 from 76.668 Monday. The index closed at 76.047 on Sept. 23, which was the lowest close since October 2008. The dollar fell about 1% versus the Japanese currency, to buy 88.73 yen, down from 89.49 yen. "The U.S. dollar was sold generally on news that gulf states were meeting with various countries to implement a shift in oil trade away from U.S. dollars and towards a basket of currencies," said T.J. Marta, founder and chief strategist at Marta on the Markets, in emailed commentary. Asked about the oil-pricing story on the sidelines of the International Monetary Fund meeting in Istanbul, Saudi Arabia's central bank chief Muhammad al-Jasser said the report was "absolutely incorrect," Reuters reported. Russia's deputy finance minister Dmitry Pankin also denied the story, according to reports. Still, gold gained on the report as did oil due to the dollar's decline. See more on gold futures. Economists at BNP Paribas doubted Saudi Arabia would run the risk of straining relations with the United States over oil pricing, particularly amid fears of Iran's development of nuclear weapons. "Saudi Arabia holds the globe's biggest oil reserves, which need the protection of U.S. powers," they wrote. "Pricing oil in U.S. dollars is the price Saudi Arabia will pay for this protection. There are many reasons to be dollar bearish, but a potential re-pricing of commodities seems to be the least convincing." Despite the official denials, however, the article still served to reinforce underlying unease about the dollar's role as the world's primary reserve currency, strategists said. Although the Saudis might not have been in talks to reduce their dependence on the dollar, China's efforts this year to strike bilateral trade deals and take stakes in energy and commodities producers around the globe shows China is already taking steps to diversify away from its massive dollar reserve holdings, said Jane Foley, research director at Forex.com. "The crux of this story is, of course, the dollar's failing credentials as the world's reserve currency," Foley said.

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