The U.S. dollar snapped a five-day losing streak on Thursday and the euro fell, as a new round of U.S.-Chinese punitive trade tariffs boosted the greenback and the annual Federal Reserve conference in Jackson Hole, Wyoming began.
The United States and China escalated their months-long trade dispute, implementing 25 percent tariffs on $16 billion worth of each other's goods. That boosted the dollar, which has benefited, as a safe-haven investment, from President Donald Trump's protectionist policies and resulting trade tensions.
Talks between U.S. and Chinese officials in Washington over trade will continue on Thursday, although most analysts do not expect much headway to be made, with risks growing that the conflict will descend into a growth-sapping tariff war.
The preliminary talks "look unlikely to yield too much in the way of progress as they enter a second day, with the U.S. president, given his current political difficulties, unlikely to want to concede any further ground," said CMC Markets analyst Michael Hewson.
Minutes from the Federal Reserve's last meeting, released on Wednesday, 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 U.S. economy.
The greenback strengthened 0.51 percent against the offshore yuan, last trading at 6.8748 yuan per dollar.
The dollar index gained 0.47 percent to 95.6, moving off a near three-week low of 94.934 reached overnight.
The dollar's move, however, was relatively modest. "The market is waiting right now for what is coming out of Jackson Hole," said Juan Prada, currency strategist at Barclays, referring to the annual central bankers' conference, which takes place from Thursday through Friday.
Fed Chairman Jerome Powell, due to speak on Friday, is expected to signal rate hikes will continue, given 3.9 percent unemployment and inflation that's now near the Fed's 2 percent target.
The euro was down about 0.44 percent at $1.1545, easing from a two-week high of $1.162.
The single currency was little moved by a widely followed survey showing that the growth of euro zone businesses picked up a touch this month, although not as much as predicted.
The dropped 1.28 percent and was last at $0.725 as Prime Minister Malcolm Turnbull clung to power after several of his senior ministers called for a second leadership vote.
The weakened 0.62 percent to 111.22 on safe-haven demand for the dollar..