New tariffs stanch 5-day US dollar slide, Jackson Hole begins

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Shares in Europe rose slightly, with the blue-chip FTSE 100 gaining 0.11 percent while the pan-European FTSEurofirst 300 index closed flat.

The Australian dollar has lost nearly two percent against the greenback since Tuesday as the prime minister's political career came to an end.

Talks between U.S. and China officials in Washington over trade will continue on Thursday, although most analysts do not expect much headway to be made.

US and Chinese officials met for the first time in over two months to try to find a way out of their deepening trade conflict.

The yen fell 0.3 per cent to 110.91 on safe-haven demand for the U.S. dollar.

"Global risk sentiment remains somewhat jittery ahead of Fed Chair Powell's speech with U.S. -Sino trade talks failing to yield any immediate progress", strategists at OCBC Bank wrote.

The dollar's move, however, was relatively modest as the market awaited the outcome of the annual central bankers' conference in Jackson Hole, Wyoming, from Thursday through Friday.

Shares of industrial giants Caterpillar Inc CAT.N and Boeing Co BA.N , bellwethers of trade confidence, were among the biggest drags on the Dow .DJI , which lost about 0.3 percent.

How Powell stands on the pace of interest rate hikes will be scrutinised after the minutes from the most recent policy meeting indicated the Fed would tighten monetary policy soon. "The burden of proof is on not raising rates at the next two or three meetings". "That would fall in line with expectations and not cause much of a stir", said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.

Fed watchers will be listening for anything Powell has to say about financial turmoil in emerging markets, the economic threats posed by the growing trade war launched by President Donald Trump and Trump's criticism of the Fed's recent interest rate hikes.

Similarly, Esther George, head of the Kansas City Fed, said she expects the central bank to raise rates twice more this year, with more next year.

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The comments, which also saw the president refuse to explicitly back the Fed's independence, dented the dollar this week.

The dollar index was 0.1 per cent higher at 95.334, while the euro fell 0.1 per cent on the day at US$1.1558.

The greenback extended its overnight surge to touch a two-week high of 111.41 yen JPY= .

The dollar index fell 0.19 percent and the euro rose 0.24 percent to $1.1597.

The Australian dollar dropped 0.8 percent to $0.7294 as Prime Minister Malcolm Turnbull's position looked in trouble after his senior ministers called for a second leadership vote.

The Aussie was up 0.4 percent at $0.7277 AUD=D4 .

Sydney's under-pressure S&P/ASX 200 fluctuated through the day and ended up 0.1 percent after the Liberals elected Scott Morrison as prime minister.

In early European trade London and Paris each edged up 0.1 percent while Frankfurt added 0.2 percent.

The National Association of Realtors is set to report data on existing United States home sales from July at 10 a.m. Sales have been sluggish over the past few months because of high home prices, which might be turning off some potential buyers. While the trade conflict between Washington and Beijing darkens the economic outlook, the supply versus demand position in oil markets remains relatively tight -especially because of the looming US sanctions against Iran.

Brent crude, the global benchmark, rose $2.15 to settle at $74.78 a barrel.

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