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Dollar drifts lower

Oct 23, 2014

The Australian dollar has drifted lower after better-than-expected US inflation figures gave the greenback a boost.

Early on Thursday, the local currency was trading at 87.76 US cents, down from 87.88 cents on Wednesday.

US inflation rose 0.1 per cent, seasonally adjusted, in September, beating analysts’ expectations of a flat result.

The figures, along with comments from a European Central Bank official, gave the greenback a boost, Westpac senior market strategist in Wellington Imre Speizer said.

“The US dollar and US interest rates rose following a slightly higher-than-expected CPI result,” Speizer said.

“Also helping the US dollar may have been ECB Council member Ewald Nowotny, who played down the possibility of corporate bond purchases but did imply it had at least been discussed.”

US stocks dropped following mixed earnings, with the broad market retreating from three straight sessions of big gains.

The Dow Jones Industrial Average fell 153.49 points (0.92 per cent) to 16,461.32.

The broad-based S&P 500 fell 14.17 (0.73 per cent) to 1,927.11, while the tech-rich Nasdaq Composite Index lost 36.63 (0.83 per cent) at 4,382.85.

Equities spent most of the trading session in positive territory, before shifting into the red at midday.

Analysts said the pullback was not surprising given that the S&P 500 had surged 4.2 per cent in the prior three days.

“After a pretty big S&P rally, at some point there was going to be some pause,” said Michael James, managing director of equity trading at Wedbush Securities.

Dow member Boeing fell 4.5 per cent on concerns about high production costs of its signature 787 Dreamliner aircraft even as it reported third-quarter earnings that bested expectations and raised its 2014 earnings forecast.

Yahoo rose 4.5 per cent as third-quarter net profit surged to $US6.8 billion ($A7.3 billion) behind its divestment of shares in Chinese internet commerce company Alibaba, which netted $US6.3 billion.

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