The Aussie dollar was the only major currency to lose ground to sterling, falling nearly two cents. It lost one and a quarter US cents and one NZ cent. For most of last week the Australian dollar and the other commodity-oriented currencies were unfazed by the continuing downward pressure on commodity prices. On the day it was reported that the Bloomberg commodity index had fallen to a 13-year low the antipodeans actually strengthened against sterling.

It was a different story last Friday morning when Chinese manufacturers reported a fifth month of slowing activity. Because the exports of mining products to China is such an important part of the Australian economy the Aussie came under fire, more than wiping out the gains it had made earlier in the week. Investors fear that a continued downturn in China would further erode demand for Australia's exports and, therefore, for its currency.