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Euro continues to rise ahead of Fed minutes, trade talks

London

THE euro on Wednesday rose for a sixth consecutive day as investors rushed to cover their short positions and markets awaited Federal Reserve minutes and news of US-China trade talks.

The conviction of United States President Donald Trump's former campaign chairman on eight counts of financial wrongdoing and a guilty plea by his former personal lawyer in separate cases late on Tuesday has dampened investor appetite for riskier investments across asset classes.

The S&P 500 share index earlier on Tuesday hit a record high.

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Some analysts said renewed US political uncertainty could keep the dollar under pressure, although the immediate currency impact appeared limited.

The dollar index, which fell sharply this week after Mr Trump criticised the Fed's interest rate rises, inched 0.1 per cent lower to 95.138.

Minutes of the Fed's last meeting are expected to confirm it is on course to raise rates twice more this year. "Everybody would be surprised if there is anything to dig up in the minutes. It looks smooth for the Fed to hike in September and then in December. There has been no indication that the Fed is hesitating," said Niels Christensen, an analyst at Nordea.

The euro gained 0.2 per cent to US$1.1594, close to the almost two-week high of US$1.1603 touched earlier in the session. That marks a nearly three-cent rebound for the single currency from 14-month lows hit last week on fears of contagion from a Turkish currency crisis and renewed worries about Italian political turbulence.

In quiet markets the big mover among the major currencies was the Australian dollar, at one point down almost half a per cent to US$0.7333 as Prime Minister Malcolm Turnbull faced another possible challenge to his leadership. The Aussie, seen as a proxy for US-China trade war risks, has held above 20-month lows reached last week, however.

The US-China trade talks are set to begin later on Wednesday in Washington, although expectations are generally low given they do not involve high-level officials.

The dollar moved sideways against the yen at 110.32 yen. It had weakened to 109.775 overnight, its lowest since late June.

The New Zealand dollar climbed to a two-week peak of US$0.6772 after strong retail sales data, before falling to US$0.6700.

The offshore Chinese yuan fell 0.2 per cent to 6.8439 yuan. Most emerging market currencies were lower, although losses were contained.

The Turkish lira, with trading thin during a national holiday, rose slightly to 6.0566 lira per dollar. REUTERS