Dollar hits seven-month high on ECB's Draghi, pressures oil, stocks

Thu Oct 20, 2016 4:47pm EDT
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By Dion Rabouin

NEW YORK (Reuters) - The euro fell to a four-month low against the U.S. dollar on Thursday and the greenback rose to its highest in seven months against a basket of major currencies after the European Central Bank President left the door open to more monetary stimulus.

The rise in the U.S. dollar knocked down oil prices which are traded in dollars and pressured U.S. stock prices.

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 euro asset-buying program.

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

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

Crude oil prices fell just under 2.5 percent, also weighed by profit taking. A strong rally on Wednesday had taken prices to their highest in 15 months in the wake of unexpected inventory drawdowns.

U.S. stocks were also pushed lower by weak earnings reports from index heavyweights such as telephone service provider Verizon Communications Inc and insurer Travelers Companies, Inc . Telecom stocks were the worst-performing sector, down 2 percent, their worst one-day percentage drop since Sept. 9.

The Dow Jones industrial average fell 40.27 points, or 0.22 percent, to 18,162.35. The S&P 500 lost 2.95 points, or 0.14 percent, to 2,141.34 and the Nasdaq Composite dropped 4.58 points, or 0.09 percent, to 5,241.83.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., October 19, 2016.  REUTERS/Lucas Jackson