canada loses jobs

Headlines: Low oil, rate rise…

In Business and Currency by Continental StaffLeave a Comment

Every week here at the Current we bring you the biggest business stories from around the world.

Oil prices low

Oil prices hit a seven year low with Brent crude falling nearly 4.5% to $37.93 and US crude falling 3.1%. THe International Energy Agency has warned that oil prices could continue to fall further in 2016 as OPEC shows no sign of slowing down production and demand has remained weak. Warm weather across North America has decreased demand as consumers do not need to heat their homes.

Oil affects markets

Low oil prices have battered the markets on Friday with the S&P 500 down almost 2%, the FTSE 100 and the Nasdaq both fell 2.2% while the Dow Jones is down 1.8%. Markets will likely continue to remain volatile until oil prices stabilize.

The cost of low oil

Alberta is suffering from the human cost of low oil prices. Suicides are up around 30%, an increase that many analysts are attributing to job losses.  The unemployment rate has ballooned to 6% due to layoffs caused by low oil prices. In response the newly elected NDP government will invest $10 million into mental health services.

Loonie low

The loonie hit an 11 year low, in no small part due to the tumbling price of oil. As oil prices fell the loonie dropped to just 73 USD. Not since Paul Martin was Prime Minister in 2004 has the loonie sunk so low. Canadians likely will not see a resurgent dollar until, or if, oil prices rise.

Rate rise

According to Reuters, 90% of economists expect the Fed to raise rates for the first time in almost a decade on December 16th. Despite being much mooted over the course of 2015 the Fed has thus far elected to resist raising rates in the wake of the continued low cost of oil, China’s slowdown and uncertainty in Europe. Raising rates could hurt manufactures and exporters in the American economy due to the higher value of the USD.

Negative rates

The Bank of Canada meanwhile has suggested that they would be willing to implement negative interest rates should the current low rates be insufficient to help jumpstart the economy. Negative interest rates would encourage commercial banks and even everyday people to put their money in, well, literally anything other than the bank. Negative interest rates would make borrowing cheaper and encourage spending and investment, all of which have been struggling as a result of low oil prices.

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