Under the financial dark clouds, a surge of risk aversion is stirring, and the US dollar has achieved its largest increase in a month.

Against the backdrop of a broad decline in global stock and bond markets, investors are rushing to buy safe-haven assets, leading to the US dollar posting its largest monthly gain in a month. The Bloomberg Dollar Spot Index rose by 0.7% at one point, marking its biggest intraday gain since July 30. The dollar strengthened against all G10 currencies, while the yen and pound saw significant declines. As concerns arise over the UK's fiscal situation and potential political turmoil in Japan, traders are flocking to the US dollar in search of relative stability. Analyst Chris Turner from ING Group notes that despite the possibility of weak US employment data, the dollar may still find support due to potential tariffs from BRICS countries and the typical seasonal strength in September. Fiscal worries are weighing on other major currencies, causing the dollar to rise. The pound fell by 1.2% against the dollar to 1.3379. The UK's benchmark 10-year bond yield is the highest among G7 countries, and the rising cost of debt could exacerbate the challenging fiscal situation facing UK Chancellor Rishi Sunak ahead of the Autumn budget announcement. The yen also performed poorly, dropping by over 1% against the dollar to 148.79 yen to 1 dollar, hitting its lowest level in a month. Earlier, a close ally of Japanese Prime Minister Shizo Abe and Secretary-General of the Liberal Democratic Party, Hiroyuki Moriyama, announced plans to resign, taking responsibility for the party's defeat in the July 20th Upper House elections. Bank of Japan Deputy Governor Masayoshi Amamiya did not signal any firm actions in his speech on Tuesday. The cost of currency hedging across various maturities has risen, particularly in short-term options, as traders prepare for the US non-farm payroll report set to be released on Friday. This report will not only be a key indicator of the health of the US economy but could also directly influence the Federal Reserve's decision on whether to initiate a new round of interest rate cuts at the September meeting.