Investing.com - The dollar was higher against a currency basket on Thursday as fresh legal issues for U.S. President Donald Trump and an ongoing trade spat between the U.S. and China weighed on market sentiment.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.28% to 95.26 by 10:05 AM ET (14:06 GMT), snapping six days of losses. The index hit a low of 94.83 the previous day, its lowest since August 8.
Political risks surrounding U.S. President Donald Trump mounted as the criminal conviction of two of his former associates this week raised questions over whether he will remain in office.
Renewed worries about U.S. - China trade tensions also supported safe haven demand for the dollar.
A new round of U.S. tariffs on $16 billion of imports from China took effect on Thursday, followed immediately by Beijing imposing retaliatory tariffs on the same amount of U.S. imports to China.
The tit-for-tat trade spat between the world’s two largest economies continues even as representatives from both countries are engaged in low level talks in the U.S.
Earlier this week, Trump played down the prospects of any imminent success from the discussions, saying that he didn’t “anticipate much” of an outcome.
Demand for the dollar was also underpinned after the latest Federal Reserve minutes indicated that plans for additional rate hikes this year remain on track.
The Fed minutes also showed that officials discussed how global trade disputes could affect businesses and households.
The Fed has raised rates twice this year and is expected to raise rates again next month and one more time this year.
Investors were looking ahead to a meeting of global central bankers in Jackson Hole kicking off later Thursday, with Fed Chair Jerome Powell due to address attendees in a speech Friday.
The dollar rose to more than one-week highs against the yen, with USD/JPY advancing 0.56% to 111.19.
The euro was lower against the firmer dollar, with EUR/USD slipping 0.22% to 1.1569.
In the euro zone, data on Thursday showed that euro zone private sector activity continued to grow in August, albeit at a slower rate than expected. Expectations for future growth fell to the lowest level for almost two years, with the prospects of a trade war hitting the outlook for manufacturers.
The pound was lower against the firmer dollar, with GBP/USD down 0.55% to 1.2838 as the prospect of a no-deal Brexit continued to weigh.
Meanwhile, political turmoil in Australia pressured the Aussie lower.
Australian Prime Minister Malcolm Turnbull was clinging to power after a number of senior government ministers resigned amid a leadership crisis in the ruling Liberal party.
AUD/USD was down 1.16% to 0.7264, re-approaching the nineteen-month trough of 0.7201 reached on August 15.