Dollar rallied across the board on Wednesday as a tumble in Shanghai’s stock market and a weaker-than-expected U.S. durable goods report bolstered demand for the greenback as a safe-haven asset. In addition, the Fed’s 'Beige book' stated that the pace of the U.S. economic recession slowed or stabilised in most areas of the country. The Fed also said in the report that the labour markets across the country were 'extremely soft, with little upward pressure on wages'.

Euro dropped sharply against the dollar as an unexpectedly weak U.S. durable good report revived the greenback’s appeal. U.S. durable goods orders fell 2.5% in June, the largest drop since January and worse than economists’ expectations of a 0.7% decline. The single currency hit an intra-day low of 1.4007 versus the dollar after the Fed’s Beige book before recovering partly due to profit-taking as the DJI pared some of its early losses and closed down 26 points. Cross selling versus sterling also weighed on the euro as eur/gbp tumbled from 0.8654 to 0.8551.

The British pound fell against the greenback as a 5% drop in the Shanghai stock market prompted investors to shy away from riskier assets. In addition, official data showed that British financial institutions lent less money to households last month than at anytime in the past 15 years, overshadowing a modest rise in mortgage approvals, indicating that the minimal pick-up in bank lending growth might not be able to support a strong and sustained recovery in the wider economy. Cable slid to as low as 1.6346 in European morning before rebounding.

The Swiss franc declined to an intra-day low of 1.5282 versus the single currency after SNB's Jordan said FX interventions have been effective so far and SNB will continue to intervene to fight a rise in the franc versus euro if needed. Jordan said signs of economic stabilisation abroad raised hopes that Swiss economy will soon have reached trough.

The Australian dollar, New Zealand dollar and Canadian dollar, known as three commodity currencies, dropped versus against the greenback as U.S. crude oil futures tumbled more than 6% and gold price slumped more than 1% to as low as $925.90/ounce. Aud/usd fell from 0.8279 to 0.8125 while usd/cad rose from 1.0802 to 1.0935. The Reserve Bank of New Zealand kept official cash rate unchanged at 2.50% but warned an economic outlook was uncertain and the currency’s strength contained risks. Kiwi fell from 0.6575/80 to 0.6515/20 after the central bank’s statement.

Data to be released on Thursday include Japan industrial production, U.K. nationwide house price, German unemployment rate, eurozone economic sentiment and business climate, U.S. jobless claims, Canada PPI.