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Euro falls as US dollar snaps losing streak
THE US dollar snapped a five-day losing streak and the euro fell on Thursday, with the greenback boosted by political uncertainty, a new round of trade tariffs and the Federal Reserve's latest policy meeting minutes that signalled a September rate rise.
While the minutes were largely as expected and initially taken as dovish by the market, analysts said that US dollar bulls had been looking for an excuse to pile back into the greenback after it had lost more than 2 per cent from almost 14-month highs during its longest losing streak of the year.
The United States and China escalated their months-long trade war, implementing punitive 25 per cent tariffs on US$16 billion worth of each other's goods, rattling investors who have sought safety in the US dollar.
The greenback also found support after the Fed's minutes showed that officials discussed raising rates soon.
"I think the market has been waiting for the moment to get back in (to the US dollar)," said Neil Mellor, a strategist at BNY Mellon.
The US dollar index gained 0.3 per cent to 95.415, moving off a near-three-week low of 94.934 reached overnight.
The euro was down about 0.3 per cent at US$1.1559, easing from a two-week high of US$1.1623.
The single currency was little moved by a widely followed survey showing that the growth of eurozone businesses picked up a touch this month, although not as much as predicted.
"I'm still not fully convinced we have a sustained dollar rally here, especially after Mr Trump's comments," Mr Mellor said, referring to US President Donald Trump's criticism of the Fed's rate hikes in an interview this week with Reuters.
The Australian dollar dropped 0.8 per cent to as low as $0.7283 as Prime Minister Malcolm Turnbull clung to power after several of his senior ministers called for a second leadership vote.
The yen fell 0.3 per cent to 110.91 on safe-haven demand for the US dollar.
The Fed's minutes showed that officials had examined how global trade disputes could affect businesses and households, suggesting that the market's perceived path for monetary tightening could have to change if the trade conflict upsets the US economy.
Talks between US and China officials in Washington over trade will continue on Thursday, although most analysts do not expect much headway to be made. REUTERS