The dollar slipped lower against the other major currencies today, after downbeat U.S. trade data, but it still remained close to one-week highs as mounting concerns over the global ramifications of the Brexit vote boosted demand for safer assets.
The U.S. Bureau of Economic Analysis said that 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.
The pound came under broad selling pressure after the Bank of England warned yesterday of “challenging” risks to financial stability following the Brexit vote and eased regulatory requirements on the banking sector.
BoE Governor Mark Carney said that the move represented a “major change” that would help the economy to cope with the Brexit consequences.
In its bi-annual financial stability report, the BoE said that the risks it had feared ahead of the Brexit poll had started to materialise, as sterling plunged to 31-year lows and as financial stocks tumbled 20%.
Carney had already signaled last week that more stimulus may be needed over the summer, sparking expectations for a rate cut at its August policy meeting.
Earlier today, 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%.
Elsewhere, USD/CAD gained 0.45% to 1.3041 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 down 0.10% at 96.17, after rising to a one-week high of 96.55 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.