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Headlines: GDP shrinking, UK growth, ice wine…

In Business and Currency by Continental StaffLeave a Comment

Last weeks biggest business, currency, and travel stories: Canada’s economy shrinks in October, the early cold snap is good news for wine producers, UK growth is revised down pre-Brexit and up post-Brexit, Bitcoin prices surge, European banks are being fined for their part in the 2008 financial crisis, and could the loonie fall to 65 cents US?

Shrinking

Canada’s GDP shrank 0.3% in October following 4 consecutive months of growth, in the second worst month for the manufacturing industry since 2009. Oil and gas, and  manufacturing both shrank by 1.3%, while the service sector rose by a small 0.1%. Manufacturing alone fell 2%. Data for Q4 is still rolling in but the latest news paints a pessimistic picture.

Ice Ice Baby

Winter this year came earlier and colder than last year but at least one industry is happy about that. Ice wine benefited from a cold snap which allowed them to harvest their grapes weeks ahead of schedule. Ontario produced about 90% of all Canadian ice wine, and the majority of that is in Niagara. Ice wine requires sustained temperatures below -8.

Could the loonie fall to 65 cents?

In an article published on the CBC David Doyle of Macquarie Capital Markets Canada Ltd. predicted that the loonie could fall to 65 cents over the next year. His prediction is based on the recent interest rate hike from the Fed (and the fact that the Bank of Canada will not follow suit – meaning a stronger greenback and weaker loonie), and the price of oil which, despite increasing as of late thanks to OPEC’s decision to cut production, will not likely not go above $60.

UK Growth

UK growth over the summer from July to September has been revised up from 0.5% to 0.6%. The increase is being credited to “robust consumer demand” by the Office for National Statistics. Despite this the ONS has revised down first quarter growth from 0.4% to 0.3%, and second quarter from 0.7% to 0.6%. The results indicate that Brexit had little or no impact and that the UK’s yearly growth would be positive.

Bitcoin price surge

Bitcoin has hit a 3 year high, breaking the $900 mark this week. At the beginning of the year one bitcoin was only worth $435. The growth comes despite hacks, and some experts believe the increase is due to the depreciation of the Chinese Yuan which has fallen 7% over 2016. Bitcoin is popular in China as it allows citizens to avoid local laws on money trading.

Pay Bank

Deutsche Bank will pay US authorities $7.2 billion in fines for selling mortgage-backed securities. Such financial instruments were the cause of the 2008 financial crash. Other European banks including Credit Suisse and Barclays are also under investigation. Credit Suisse has already agreed to pay $2.4 billion in fines and $2.8 billion in compensation over the next five years. All cases pertain to deals done in the lead up to the financial crisis a decade or longer ago.

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