August 22, 2018 / 10:44 AM / a month ago

FOREX-Euro nears two-week high as markets await Fed minutes, trade talks

* Quiet markets await Fed minutes, U.S.-China trade talks

* Dollar slips after Trump comments had weighed

* Euro on for five-day rise; traders cover short positions

* Australian dollar lower following political squall

* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh (Adds quotes, updates prices)

By Tommy Wilkes

LONDON, Aug 22 (Reuters) - The euro on Wednesday rose for a sixth consecutive day as investors rushed to cover their short positions and markets awaited Federal Reserve minutes and news of U.S.-China trade talks.

The conviction of United States President Donald Trump's former campaign chairman on eight counts of financial wrongdoing and a guilty plea by his former personal lawyer in separate cases late on Tuesday has dampened investor appetite for riskier investments across asset classes.

The S&P 500 share index earlier on Tuesday hit a record high.

Some analysts said renewed U.S. political uncertainty could keep the dollar under pressure, although immediate currency impact appeared limited.

The dollar index, which fell sharply this week after Trump criticised the Fed's interest rate rises, inched 0.1 percent lower to 95.138.

Minutes of the Fed's last meeting are expected to confirm it is on course to raise rates twice more this year.

"Everybody would be surprised if there is anything to dig up in the minutes. It looks smooth for the Fed to hike in September and then in December. There has been no indication that the Fed is hesitating," said Niels Christensen, an analyst at Nordea.

The euro gained 0.2 percent to $1.1594, close to the almost two-week highs of $1.1603 touched earlier in the session.

That marks a nearly three cents rebound for the single currency from 14-month lows hit last week on fears of contagion from a Turkish currency crisis and renewed worries about Italian political turbulence.

"The euro is helped by a narrowing BTP/Bund spread, slightly lower U.S. real yields and most of all, short-covering," said Kit Juckes, foreign exchange strategist at Societe Generale, referring to the gap between Italian and German government bonds.

"From today's vantage point, failing to break back above $1.16, the spike down and bounce back over the last two weeks just looks like a summer wobble but a lasting bounce needs stronger foundations."

In quiet markets the big mover among the major currencies was the Australian dollar, at one point down almost half a percent to $0.7333 as Prime Minister Malcolm Turnbull faced another possible challenge to his leadership.

The Aussie, seen as a proxy for U.S.-China trade war risks, has held above 20-month lows reached last week, however.

LOW EXPECTATIONS

The U.S.-China trade talks are set to begin later on Wednesday in Washington, although expectations are generally low given they do not involve high-level officials.

The dollar moved sideways against the yen at 110.32 yen . It had weakened to 109.775 overnight, its lowest since late June.

The New Zealand dollar climbed to a two-week peak of $0.6772 after strong retail sales data, before falling to $0.6700.

The Russian rouble skidded lower as investors worried about the risks from U.S. sanctions. The rouble retreated 0.8 percent to 67.735.

The offshore Chinese yuan fell 0.2 percent to 6.8439 yuan. Most emerging market currencies were lower, although losses were contained.

The Turkish lira, with trading thin during a national holiday, rose slightly to 6.0566 lira per dollar. (Editing by Larry King and Raissa Kasolowsky)

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