The euro fell to a four-month low against the US dollar and the greenback rose to its highest in seven months against a basket of major currencies yesterday after the European Central Bank president left the door open to more monetary stimulus at its policy meeting.

The rise in the US dollar knocked down oil prices which are traded in dollars and pressured US stock prices as many leading companies are dependent on export sales.

The ECB left its ultra-loose monetary policy unchanged but president Mario Draghi kept a wide range of options open for further stimulus in December, shooting down any talk of tapering its €1.7 trillion asset-buying programme.

The US dollar gained further after the publication of a stronger-than-expected US existing home sales report.

“The move in the dollar hurt oil, which hurt energy, which hurt stocks,” said Stuart Guilfoyle, chief market economist at Stuart Frankel & Co.

Crude oil prices fell by around 2.5 per cent yesterday, giving back some of the week’s gains which had taken crude prices to their highest in 15 months in the wake of unexpected inventory drawdowns.

US stocks were also pushed lower by weak earnings reports from index heavyweights such as Verizon which fell 2.3 per cent. Telecom stocks were the worst-performing sector on the day, down 2.3 per cent.

The next biggest loser among US stocks was the energy index which was off 1.1 per cent.

The Dow Jones industrial average fell 58.45 points, or 0.32 per cent, to 18,144.17, the S&P 500 lost 9.36 points, or 0.44 per cent, to 2,134.93 and the Nasdaq Composite  dropped 25.60 points, or 0.49 per cent, to 5,220.81.

A measure of world equity markets was last down 0.3 per cent after touching a fresh one-week high following Draghi’s comments.

However, European equities jumped following Draghi’s remarks with the pan-European STOXX 600 index rising more than one per cent from its lows before closing up 0.12 per cent.

The euro fell as low as $1.0917 versus the US dollar, its lowest since June 24, helping the dollar index rise to its highest since March 10.

The Mexican peso climbed to a six-week high in overnight US trading in the immediate aftermath of the US presidential debate between Republican Donald Trump and Democrat Hillary Clinton, but fell back in morning trade. The peso was down 0.55 per cent in morning North American trading to 18.607 per dollar.

The peso is seen as the chief proxy for market pricing of the Republican candidate’s chances in view of his promises to impose tough limits on immigration and rewrite trade deals.

“The early polls suggest Clinton was once again the winner here and so the Mexican peso has been one of the most obvious beneficiaries,” said James Athey, fixed income investment manager at Aberdeen Asset Management Ltd.

“The magnitude of the move, however, suggests that the market has largely concluded that Trump won’t win. That doesn’t mean that the result is a foregone conclusion. Markets, pollsters and pundits all predicted the wrong result in the UK’s referendum on EU membership. That should act as a cursory lesson now.”

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