Wall Street went into retreat overnight as the unrest in Hong Kong weighed and strong US data made a rate hike look more likely.
That saw the US dollar extend its four-year high, hurting other currencies including the Aussie.
On the markets, the Dow Jones retreated 0.25 per cent to 17,071, giving back some of Friday’s strong 1 per cent gain.
The S&P 500 also fell 0.25 per cent to close at 1,978.
Official data revealed US consumer spending rebounded in August, up 0.5 per cent, as a pick-up in employment encouraged spending.
It follows data on Friday which showed the US grew at its fastest pace in two-and-a-half years in the second quarter.
It has added to concern the Fed could raise rates as soon as early next year.
The US volatility index continued to rise, up another 7.6 per cent overnight, helped by the unrest in Hong Kong.
In yesterday’s session, Hong Kong’s stocks fell the most in almost three weeks, down 1.9 per cent, as the police staged the biggest crackdown on protesters since the city returned to Chinese rule.
Across the Atlantic, after hitting a six-week low last week, the FTSE 100 finished flat overnight, but the Eurostoxx 600 retreated 0.4 per cent as economic indicators for the region all came in below expectation.
The Australian share market was set to add to yesterday’s 1 per cent loss; at 8:25am (AEST) the ASX SPI 200 was 0.2 per cent lower at 5,252.
The Australian dollar has seen a sharp slide in the last 24 hours, as the US dollar gains strength and as the iron ore price continues to fall.
It hit a low of 86.85 US cents late yesterday, it is recovered slightly overnight, but was once again falling in early trade down to 87.19 US cents.
The iron ore price was also once again on the slide – it lost almost $US1 a tonne yesterday to $US77.70.
The spot gold price eased overnight as the market moves money into the US dollar – gold was worth $US1,215.16 an ounce.
Oil prices also eased – West Texas crude closed at $US94.484 a barrel and the Tapis crude price was at $US99.19 a barrel.