Why the rally in the US Dollar?

I don't understand it, perhaps someone who knows more about what makes currency rates go up and down can enlighten me. The economy here is no great shakes yet the Dollar has rallied in the past month vs both the Euro and the Pound Sterling from $1.36/Euro to basically $1.30/Euro and from $1.57/Pound Sterling to about $1.50/Pound Sterling. Does this have to do with the possibility of sequestration getting the US on the path to getting its massive debt under control or is it just that no matter how bad things are here, that they are worse over there?

Investors, banks, even countries, keep buying Treasury notes even though they are no longer triple A.

I am pretty sure that makes the US Dollar go up.

I get all that, but what is causing them to do that?

Britain's credit was downgraded from AAA to AA1 last Friday, so that is the main reason the pound fell from $1.54 to $1.50. I think there is a greater risk of recession in Europe and that is weighing on the currency markets as well. I don't think sequestration has much of an impact at all as it is only going to cut $44 Billion from a yearly deficit of almost $1 Trillion.

Thanks. I didn't hear about Britain's credit. The sequestration didn't add up to me either but sometimes perception can equal reality, and was wondering if some of that was going on with sequestration.

Quote: Gabes22

I get all that, but what is causing them to do that?

There is still nothing safer and they don't know where else to put the money.

The election in Italy...