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Dollar Increases

On Wednesday, the greenback changed hands higher compared to the other major currencies, following the announcement of strong U.S. service sector activity statistics and as worries over the worldwide results of the Brexit vote sustained to support demand for safer assets.

The Institute of Supply Management stated its non manufacturing, purchasing managers’ index increased to an eight month peak of 56.5 the previous month, from 52.9 in May. Analysts anticipated the index to increase to 53.3.

The report came following the U.S. Bureau of Economic Analysis statement that the trade deficit broadened to $41.14 billion in May from $37.38 billion in April, the figure was taken from the projected shortage of $37.40 billion.

Analysts projected the trade shortfall to broaden to $40.00 billion in May.

GBP/USD fell 1.04 percent to 1.2885, just off to fresh 31-year decline of 1.2797.

The pound stayed under wide selling pressure as Britain’s surprise decision to exit the EU continued to stimulate doubts over the country’s economy.

On Tuesday,  the Bank of England warned “challenging” risks to financial strength after the Brexit vote and reduced regulatory requirements on the banking sector.

Bank of England, Governor Mark Carney stated that the change represented a "major change" that would support the economy to deal with the Brexit consequences.

On Tuesday, New York Fed President William Dudley stated that the U.S. economy was on the right trail, however, added that any indications of post-Brexit volatility in the European Union could have additional severe consequences for the United States.

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Instead, on Wednesday, Fed member Daniel Tarullo stated there is no need to increase U.S. interest rates until the  inflation moves in the direction wanted by the Fed.

EUR/USD dropped 0.18 percent to 1.1055, while EUR/GBP increased 0.93 percent to trade at a 35-month peak of 0.8583.

On Wednesday, the data showed  that  the orders of the German factory were flat in May, discouraging the anticpated upsurge of 1.0 percent. Factory orders dropped by 1.9 percent in April, whereas the number was reviewed from a prior projected decline of 2.0 percent.

USD/JPY declined 0.77 percent to 100.96, while USD/CHF added 0.14 percent to 0.9781.

The Australian dollar went higher than the kiwi. NZD/USD fell 0.69 per cent to 0.7104, while AUD/USD increased 0.34 per cent at 0.7487.

Somewhere else, USD/CAD increased 0.36 percent to a one-week peak of 1.3028, following the statement  of the Statistics Canada that the country’s trade deficit lessened from C$3.32 billion in April to C$3.28 billion in May. Analysts anticipated the trade deficit to reduce to C$2.70 billion in May.

The U.S. dollar index, which gauges the greenback’s strong point compared to a trade-weighted basket of six major currencies, increased 0.17 percent at 96.42, close to a one week peak of 96.55 earlier in the day.

Market participants were also looking forward to the minutes of the latest Fed policy meeting, scheduled later in the day. Market players were waiting for any possible indications on the central bank’s next policy moves.

Australian Dollar Declines

The Australian dollar dropped as low as $0.7467, from an earlier period high of $0.7539, after S&P 500 reduced the outlook on Australia's AAA credit rating to negative from steady. However, the currency reduced losses to last buy $0.7507, down 0.1% on the day.

“The ratings agency had warned that deadlock on government policy after Saturday's inconclusive elections could endanger Australia's rating over the long run, according to the reports.

The euro fell 0.5% to 111.92 yen, however, managed to hold beyond its Wednesday low of 110.84 and a 3 1/2-year decrease of 109.30 posted soon after the outcome of the Brexit referendum.

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The greenback shed 0.4%  to 100.95 yen, although it also stayed above the prior session's low of 100.20 along with its June 24 nadir of 99.000 after the UK's poll.

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