Global events determine global exchange rates. That’s why every week at theCurrent we bring you the world’s biggest business stories. This week: postal service impasse, housing regulations, China and the global economy, and job growth in the US.
Postal Service in Canada could soon grind to a halt as negotiations between Canada Post and the Canadian Union of Postal Workers (CUPW) have hit an impasse. On Friday the CUPW proposed a 30 day truce, but Canada Post said they would only agree with the stipulation that the CUPW agrees to binding arbitration. If the two sides do not reach an agreement, or resolve to continue to negotiate Canada Post could lockout 50,000 employees.
In the last election the Liberal Party of Canada promised to loosen regulations to allow more people to dip into their RRSP to buy homes. Now, the Liberal government has backtracked. Red hot housing markets in Toronto and Vancouver have caused the government to support tightening of regulations, making it more difficult for people to pay for homes valued at more than $500,000 with their RRSPs. The change in policy is receiving criticism from those accusing the government of breaking promises, and praise from those that feel loosening restrictions would only inflate dangerous property bubbles.
Gao Hucheng, China’s commerce minister, has said at a G20 meeting that the global economy’s future outlook is not positive, and that the G20 will have to cooperate and lead the way in order to avoid another global economic crisis. Last month the World Bank slashed its outlook for 2016 by .5% from 2.9% to 2.4%, while in April the IMF cut its forecast by .2% to 3.2%. China will host the G20 summit later this year when leaders from the world’s largest 20 economies will discuss economic cooperation.
After a disappointing May in which only 11,000 jobs were created, job growth in the US has rebounded strongly. The US added 287,000 jobs in June. Despite this, the unemployment rate rose from 4.7 to 4.9% (unemployment is calculated differently than job growth and depends on the number of people looking for jobs, not those that are unable to work or no longer looking). The good news also means that the Fed is more likely to raise interest rates, which would boost the value of the USD, which is already riding high against other major currencies like the EUR and GBP.
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