The dollar advanced for the first day in six on Thursday as new U.S. tariffs on $16 billion of Chinese imports are set to take effect later Thursday, while China said it would impose retaliatory tariffs on the same amount of U.S. goods.
The U.S. Dollar Index, which tracks the greenback against a basket of other currencies, gained 0.4% to 95.34 by 12:55AM ET (04:55 GMT).
The index received some support as the Federal Reserve said in its most recent policy meeting that it is ready to hike rates again as long as the U.S. economy remains healthy, “Many participants suggested that if incoming data continued to support their current economic outlook, it would likely soon be appropriate to take another step in removing policy accommodation,” minutes of the July 31-Aug. 1 Federal Open Market Committee meeting released Wednesday in Washington said.
The minutes then added that “further gradual increases” in their target rate “would be consistent with a sustained expansion of economic activity, strong labor market conditions and inflation near the committee’s symmetric 2% objective over the medium term.”
Meanwhile, the Australian dollar fell as Prime Minister Malcolm Turnbull was dealt a blow to his leadership.
The AUD/USD pair fell 1.0% to 0.7290 and slid to near the lowest level this week as Turnbull’s leadership appeared to be in question after three senior ministers tendered their resignations and called for a second leadership vote.
Finance Minister Mathias Cormann resigned and said on Thursday that he believed former Home Affairs Minister Peter Dutton is the best person to lead the government. "I can't ignore reality," Cormann said. "I can't ignore the fact that a majority of colleagues in the Liberal Party... are of the view that there should be a change," he said. The NZD/USD pair also fell 0.4% to 0.6671.
Elsewhere, the USD/JPY pair gained 0.24% to 110.82, while the USD/CNY pair added 0.5% to 6.8732 as the People's Bank of China (PBOC) set the yuan reference rate at 6.8367 vs. Wednesday's fix of 6.8271.
