London attacks force safe investment

Story link: London attacks force safe investment

In the currency markets, investors looked for safe investments after the London attacks.

Trade activity went up in London about 9 a.m., calmed down on initial reports that the explosions could have been caused by a power surge, then peaked again around 9:40 a.m. as it began to be increasingly clear that the blasts were due to terrorist activity.

Volume sank again after 10 a.m. but remained higher than average all day.

Sterling fell to $1.7403 in relation to the US dollar, an 18-month low, from $1.752 before the attacks. By late in the day, however, sterling had rallied back slightly to sit at $1.743. The pound also dropped in relation to the Swiss franc. It fell to SFr2.243 before recovering to Sfr2.263 by the end of the trading day.

The US dollar was also down in relation to the Swiss franc, falling to SFr1.285 before recovering slightly to SFr1.299. The dollar also dropped initially against the euro, but by late in the day in New York it had returned to its previous level of $1.194.

Analysts said that the US dollar has been very sensitive to news of terrorist attacks since the September 11, 2001 attacks in the US, even when the US or its interests are not directly involved.