Dollar rises as market jitters spur safe-haven inflows

The dollar rose nearly 0.5% after Moody’s downgraded the ratings of 10 small and mid-sized U.S. banks yesterday, signaling concerns about the health of the U.S. banking sector surfaced.

In addition, the US Treasury’s quarterly refinancing of US$103 billion is another key event that makes the currency market nervous.

Bipan Rai, global head of foreign exchange strategy at Canadian Imperial Bank of Commerce, said the combination of U.S. Treasury refinancing, the possibility of a policy change by the Bank of Japan and rating agencies downgrading banks has unnerved the market.

If we need to paint a big picture of the macroeconomy, at least ahead of Jackson Hole, the aforementioned factors seem to predominate.