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    Dollar moves back higher on strong ISM data

    The dollar moved back higher against the other major currencies on Wednesday, after the release of strong U.S. service sector activity data and as concerns over the global ramifications of the Brexit vote continued to support demand for safer assets.

    The Institute of Supply Management said its non-manufacturing purchasing manager's index rose to an eight-month high of 56.5 last month from 52.9 in May. Analysts had expected the index to rise to 53.3.

    The report came after the U.S. Bureau of Economic Analysis said the trade deficit widened to $41.14 billion in May from $37.38 billion in April, whose figure was revised from a previously estimated deficit of $37.40 billion.

    Analysts had expected the trade deficit to widen to $40.00 billion in May.

    GBP/USD tumbled 1.04% to 1.2885, just off fresh 31-year lows of 1.2797 hit overnight.

    The pound remained under broad selling pressure as Britain’s shock decision to leave the European Union continued to fuel uncertainty over the consequences of the U.K. vote on the country’s economy.

    The Bank of England warned on Tuesday of “challenging” risks to financial stability following the Brexit vote and eased regulatory requirements on the banking sector.

    BoE Governor Mark Carney said the move represented a "major change" that would help the economy to cope with the Brexit consequences.

    New York Federal Reserve President William Dudley said on Tuesday that the U.S. economy was on the right track but added that any signs of post-Brexit instability in the EU could have more severe consequences for the U.S.

    On the other hand, Fed member Daniel Tarullo said on Wednesday said there is no need to raise U.S. interest rates until there is evidence inflation is moving towards the Fed's target on a sustained basis.

    EUR/USD slipped 0.18% to 1.1055, while EUR/GBP gained 0.93% to trade at a 35-month high of 0.8583.

    Earlier Wednesday, data showed that German factory orders were flat in May, disappointing expectations for an increase of 1.0%. Factory orders fell 1.9% in April, whose figure was revised from a previously estimated decline of 2.0%.

    USD/JPY dropped 0.77% to 100.96, while USD/CHF added 0.14% to 0.9781.

    The Australian dollar was higher, with AUD/USD up 0.34% at 0.7487, while NZD/USD slid 0.69% to 0.7104.

    Elsewhere, USD/CAD gained 0.36% to a one-week high of 1.3028 after Statistics Canada said the country’s trade deficit narrowed to C$3.28 billion in May from C$3.32 billion in April, whose figure was revised from a previously estimated deficit of C$2.94 billion.

    Analysts had expected the trade deficit to narrow to C$2.70 billion in May.

    The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.17% at 96.42, close to a one-week high of 96.55 hit earlier in the day.

    Market participants were also looking ahead to the minutes of the Federal Reserve’s most recent policy meeting, due later in the day, for possible hints on the central bank’s next policy moves.

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