Investing.com - The dollar was broadly higher against currency basket on Thursday after the latest Federal Reserve meeting minutes indicated that further interest rate hikes are in the pipeline, while the Australian dollar weakened amid domestic political turmoil.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.34% to 95.32 by 04:31 AM ET (08:31 AM GMT). The index hit a low of 94.83 the previous day, its lowest since August 8.
The dollar was boosted after Fed policymakers said they continued to expect the U.S. economy to expand at an above-trend pace, prompting the need for further rate hikes.
The Fed minutes also showed that officials discussed how global trade tensions could affect businesses and households.
The Fed has raised rates twice this year and is expected to continue doing so, with another two hikes expected before the years end.
The greenback received an additional boost from political turmoil in Australia, which 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 0.82% to 0.7290, re-approaching the nineteen-month trough of 0.7201 reached on August 15.
Concerns over political risks surrounding U.S. President Donald Trump following the criminal conviction of two associates, and 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 $16 billion of U.S. imports to China.
The tit-for-tat trade spat continues as representatives from both countries engage in low level talks in the U.S.
The dollar was higher against the yen, with USD/JPY rising 0.22% to 110.79.
The euro was lower against the firmer dollar, with EUR/USD down 0.35% to 1.1554.
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.
Meanwhile, 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 0.4% to 1.2856 as the prospect of a no-deal Brexit continued to weigh.