The dollar strengthened to its highest level in a month, as investors sought safe havens amid weakening global stock and bond markets.

The Bloomberg Dollar Spot Index rose 0.7%, its biggest intraday gain since July 30. The currency strengthened against all G-10 currencies, with the Japanese yen and British pound weakening sharply.

Traders expected the dollar to remain relatively stable on a day dominated by headlines about the UK budget crunch and potential political upheaval in Japan. Despite the prospect of weaker employment figures, the dollar could draw support from stalled yuan appreciation, potential BRICS tariffs, and its typical seasonal strength in September, according to ING Bank analysts, including Chris Turner.

UK Markets Slump as Debt Worries Push 30-Year Yields to 1998 Highs. The pound slumped 1.2% to $1.3379. The UK's benchmark 10-year yield is the highest among G7 nations, and rising debt costs threaten to exacerbate the difficult fiscal situation facing Chancellor Rachel Reeves ahead of her autumn budget.

The yen also underperformed, falling more than 1% to 148.79 per dollar, its lowest level in a month. Pressure mounted after reports that the ruling Liberal Democratic Party's Secretary-General, Moriyama, planned to step down. Meanwhile, comments from Bank of Japan Deputy Governor Ryozo Himino offered few hawkish signals.

Japanese PM Incumbent Intends to Resign Due to Election Setback Currency hedging costs rose across maturities, with demand for short-term options prominent as traders prepared for Friday's US payrolls report. (alg)

Source: Bloomberg