For three decades, the correlation between two of the world's most important prices was strongly positive, with oil and the dollar rising and falling in tandem.

Petroleum is bought and sold in dollars. That meant that as oil prices climbed, so did the global demand for dollars. The appetite for dollars increased further during recurrent oil shocks, as rising risk-aversion prompted investors to seek safety in US Treasury securities. The US currency was also buoyed by oil exporters' investing their export proceeds in dollardenominated securities; and when they spent the funds on goods, they usually bought American.

Since early 2002, however, the correlation between oil and the dollar has been negative. When oil rises, the US currency falls.

From about $19 a barrel in late January 2002, the price of oil has catapulted to $82.25.

Over the same period, the dollar has tumbled 39% to $1.4045 to the euro and 33% on a trade-weighted basis.

After the Federal Reserve on 18 September cut its federal funds rate by half a percentage point to 4.75%, crude oil rose to a record $82.51 a barrel.

OPEC nations currently buy more than three times as much from the European Union as from the US.

To the extent that oil exporters keep buying European, Europe's economy may be less affected by higher oil prices than the US economy, prompting investors to favour European investments. And since oil imports account for about a third of the US trade deficit high and rising oil prices may be particularly bad for the dollar.

What's more, many investors see the Fed reacting to rising oil prices by cutting interest rates to preserve growth and the European Central Bank by raising rates to ward off inflation.

Since the start of 1993, the dollar has been the worst performer among the world's 10 major currencies when oilprice growth is stronger than usual.

Wall Street may be breathing a sigh of relief . . . or even dancing a jig . . . following the Fed's decision to cut its federal-funds rate by 50 basis points. Yet from the average investor's perspective, the best news is that the major central banks are singing from the same hymnal.