* Australian dollar sheds 0.8 pct on political turmoil
* Euro down about 0.4 pct after reaching two-week high overnight
* Fed officials examined global trade war impact, minutes show
By Daniel Leussink
TOKYO, Aug 23 (Reuters) - The dollar rose on Thursday as investors bought the greenback on the back of political turmoil in Australia and after the minutes of the Federal Reserve’s latest policy meeting indicated the U.S. central bank is on course to further raise interest rates.
The Australian dollar tumbled more than half a percent after Australian Prime Minister Malcolm Turnbull’s leadership could be doomed following the resignation of three senior ministers.
Turnbull said he would hold a second leadership vote on Friday if he received a letter signed by the majority of the ruling Liberal party.
The Aussie was down 0.8 percent to $0.7293 as of 0356 GMT, not far off the 19-month low of $0.72025 touched on Aug. 15.
Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo, said investor demand for the safe-haven dollar was spurred by the Aussie’s sell-off.
“The Aussie is weak as it looks like Turnbull will resign,” said Ishizuki.
“Other currencies are also weakening against the dollar as the dollar is really strong against the Aussie,” he said.
The greenback also found support after the Fed’s minutes showed officials discussed raising interest rates soon to counter U.S. economic strength.
The dollar index, which weighs the greenback against a basket of six other currencies, gained more than 0.3 percent to 95.453. The index moved off a near-three-week low of 94.934 reached overnight.
The euro was down about 0.4 percent at $1.1551, moving off a two-week high of $1.1623 touched overnight. The common currency had risen for six consecutive sessions against the greenback.
Sean Callow, senior currency strategist at Westpac in Sydney, said the Aussie typically ignores Australian politics, on the assumption that commodity prices and yield differentials form the key drivers for the currency.
“Since the Liberal leadership spill on Tuesday, the Australian dollar is easily the weakest G10 currency - despite strong Q2 construction data on Wednesday - which suggests that this is a rare instance of the Aussie carrying a small political risk premium,” Callow said.
At 0417 GMT, the yen had fallen 0.27 percent to 110.84 versus the dollar on safe-haven demand for the dollar and as expectations of further U.S. interest rate increases dampened demand for the Japanese currency.
The Fed has raised rates twice this year and is widely expected to tighten policy again next month.
But dealers said political pressure on U.S. President Donald Trump and worries about the Sino-U.S. trade war continued to weigh on the dollar. The Fed’s minutes showed officials examined how global trade disputes could affect businesses and households.
“The Fed seems to be quite concerned about the trade issues,” said Shinichiro Kadota, senior FX and rates strategist at Barclays.
“If those continue to materialise... market expectations for a rate hike might change depending on the outcome” of U.S.-China trade negotiations.
U.S. and Chinese officials met for the first time in over two months to try to find a way out of their deepening trade conflict.
But the low-level discussions did not stop a new round of U.S. tariffs kicking in on $16 billion of imports from China on Thursday, followed immediately by a reciprocal China imposition.
The offshore yuan was 0.36 percent weaker at 6.8734 yuan per dollar about 40 minutes after the latest round of tariffs took effect.
The British pound gave up about 0.4 percent to $1.2864 after Britain said it will step up its planning for a no-deal Brexit. (Reporting by Daniel Leussink; Editing by Eric Meijer and Richard Borsuk)