Attacks Trigger Flight To Safety?


At least 80 people were killed in a series of attacks apparently aimed at tourists in India's financial capital Mumbai on Wednesday night, with television channels saying Westerners were being held hostage at two five-star hotels.

"They wanted anyone with British or American passports," a witness at the Taj Hotel, who said he was from London and was in India on business, told the NDTV news channel. He had smoke stains all over his face. "They wanted foreigners."

Flight To Safety?

Typically this kind of terrorist attack sparks a flight to safety and drives the dollar higher. However, don’t expect that kind of a move this time.

“We’re not seeing it now and part of the reason is that the safe haven move has been triggered already,” explains Ashraf Laidi, chief strategist at CMC Markets. In other words, the financial crisis has already caused a much greater flight to safety.

At the time of writing we were told that the markets in India will open Thursday.

Dollar Outlook

Turning attention to the overall outlook for the dollar, Ashraf Laidi tells us that he expects the dollar to lose value. “Through the end of the year we could see the dollar unwind. I expect it will lose ground against the pound, euro and Canada's dollar,” because it’s come so far so fast.

But everything is relative. Win Thin, senior currency strategist at Brown Brothers Harriman, remains bullish on the dollar mostly because the American financial system is in better shape than most others, He says, “the dollar’s rally probably has legs because if you’re negative on the dollar what are you positive on?”

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