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Terror on the streets of London


Britain and its Houses of Parliament came under attack on Wednesday from a knife-wielding assailant who ploughed a vehicle through throngs of people on Westminster Bridge before fatally stabbing a police officer. In the largest-scale terrorist incident in London since suicide bombers killed 52 people in July 2005, at least five people died, including the attacker. A further 40 were injured, according to police.

The attack paralysed the heart of British government as members of parliament and officials were held in lockdown for hours in the House of Commons, while Theresa May, the prime minister, was whisked away to safety by car. It was the latest in a series of terror assaults in Europe and came exactly one year after suicide bombers attacked Brussels, targeting the airport and a metro station in the city centre. It bore similarities to the attack in Nice last year when a man drove a truck through a crowd of pedestrians, killing 84 people.

Late on Wednesday night, Mark Rowley, acting deputy Metropolitan Police commissioner, confirmed that the force’s working assumption was that the attack had been “inspired by international terrorism” and was “Islamist related”. Mr Rowley said the police “think we know” the identity of the attacker, but declined to give further details while the search for any associates continued. The acting deputy commissioner named the police officer killed in the attack as Keith Palmer, 48, an unarmed member of the parliamentary protection team who had 15 years service with the Met and was a husband and father.

Theresa May delivered a statement outside of 10 Downing Street last night to condemn the “sick and depraved terrorist attack” on the “heart of our capital city”. The prime minister said the nation’s threat level would remain at “severe” and warned terrorists that efforts to undermine Britain’s values were “doomed to failure”. “We will all move forward together, never giving in to terror and never allowing the voices of hate and evil to drive us apart,” she said.  Earlier, President Donald Trump condemned the attack and called Mrs May to express US support. Angela Merkel, German chancellor, said the country stood “resolutely on Britain’s side in the fight against any form of terrorism”. Bernard Cazeneuve, the French prime minister, expressed “solidarity” with the UK. The government recently revealed that UK security services had foiled 13 potential attacks in less than four years. Counter-terrorism units in Britain are running more than 500 investigations at any one time.

Markets were in a subdued mood overnight, making a tentative recovery from a midweek sell-off in which many global stock markets suffered their worst session since the US presidential election. The underlying mood in the markets remained distinctly risk-averse amid growing doubts about the pace of fiscal policy reform under President Trump. The dollar remained under pressure, with the yen reaching its highest level against the US unit for four months. The yield on the 10-year US Treasury hovered near a three-week low and gold touched its highest since the start of the month. The terror attack in London on Wednesday also kept investors in a cautious mood.

A jolt to global financial markets this week has raised questions about the outlook for the “Trump trade”, the global rally that took place after Donald Trump won the US presidential election. Concerns this week that Mr Trump might struggle in his efforts to repeal “Obamacare” has markets fretting that he may also face difficulty pushing through his other pro-business agendas. Wall Street recovered on Wednesday from its biggest one-day sell-off in more than five months, with the S&P 500 edging 0.1 per cent higher. Volatility, as measured by the popular Vix index, is still rising, however, up 2.7 per cent on Wednesday at 12.8 compared with 11.6 a week ago. Owing to that sentiment, markets will be closely watching the outcome of the House vote on repealing Obamacare for insights into how tough the going might become for the Trump administration to secure the passage of his other mooted measures. “This is seen by some commentators as an important data point allowing markets to make a judgment on the ability of the US government to deliver on other reform projects, particularly on taxes and banking sector reform,” said Hans Redeker, FX strategist at Morgan Stanley. The vote is scheduled to take place later today.  

 The dollar index, a measure of the US currency against a basket of global peers, was up 0.1 per cent at 99.735. On Tuesday, the gauge closed below the 100 mark for the first time since early February. The yen was 0.1 per cent weaker against the greenback in early trade this morning at ¥111.28 per dollar and facing its first decline in eight sessions. The New Zealand dollar was flat as the country’s central bank held interest rates at a record low 1.75 per cent and played down the prospects for possible rate rises this year. The British pound was flat at $1.2486 having slid to as low as $1.2426 on Wednesday after the terror attack outside Britain’s Houses of Parliament.

EUR/USD – Current Price $1.0786 (-$0.0009)

EUR/USD traded within a tight 1.0780-1.0792 range before finding some support on news of the latest French election poll, putting Macron on top in the first round and second round of next month’s election. The pair advanced to highs above the 1.0800 level before retreating to fresh session lows in good two-way business. In terms of technicals, we look for support at Tuesday’s low at $1.0717 followed by last Thursday’ low at 1.0704. On the upside, today’s high at 1.0804 and yesterday’s high at 1.0825 are in focus.

GBP/USD – Current Price $1.2490 (+$0.0008)

Cable also traded within a tight range overnight before rallying once again in early European trade. The pair moved up to test 1.2520 before retreating to around 1.2480 (where the rally began) ahead of the retail sales. From a technical view, yesterday’s low at 1.2421 may offer support ahead of yesterday’s/Monday’s lows at $1.2338/33. On the upside, the earlier high at 1.2515 and the February 24th high at 1.2570 are in focus.

USD/JPY – Current Price ¥111.04 (-¥0.10)

USD/JPY traded higher in early Asia, up through 111.50 at one point, as news of talks and compromise to get the Trump healthcare bill passed gave a bit of support to the buck. However, the upside lost momentum and the pair dropped back towards 111.00. Below here, yesterday’s multi-month low at ¥110.71 may offer some support ahead of the November 22nd low at ¥110.23. On the upside, yesterday’s high at ¥111.79 and Tuesday/Monday’s high at ¥112.86/89 are in focus.

GBP/EUR – Current Price €1.1565 (+€0.0006)

GBP/EUR is trading little changed after a choppy European morning, which has seen the pair rally to highs at 1.1586 before retreating to fresh lows in at 1.1557. Traders now look to the UK retail sales release and central speakers later today. In terms of technicals, today’s high at 1.1586 may offer some resistance before the March 6th high at 1.1598. On the downside, today’s low at 1.1557 and yesterday’s low at 1.1492 are in focus.

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