This week’s biggest business, currency, and travel stories: the US adds jobs, but their trade deficit grows; record stock market highs for the Nasdaq and FTSE 100; Brazil’s recession finally ends but trouble on the horizon; the GBP dips and recovers as UK election uncertainty takes hold; polls indicate an up-and-down year for the loonie; Canada exports more; and Blackberry stock on the up.
The US added 138,000 jobs in May, below the 180,000 that experts had predicted. Still, the unemployment rate was a very healthy 4.3%, falling 1/10 of a percent to its lowest level since 2001. Job figures for March and April were also revised down. Low unemployment is one of the factors that the Fed uses to gauge the health of the economy to determine whether or not to raise interest rates – a major factor behind currency exchange rates.
Record intraday highs
The Nasdaq hit a record intraday high of 6,263.21, and the British FTSE 100 hit an intraday high of 7,598.99 on Friday.
US Trade deficit
The US trade deficit grew by 5.2% from March to April to $47.6 billion – the highest level since January. Exports fell 0.3% while imports rose by 0.8%. Trade deficits create a downward pressure on most currencies, but the strength of the greenback and its use as a global reserve currency means the effect is highly mitigated.
Brazil recession over
Brazil’s economy grew by 1% in the first quarter of 2017, ending two years of negative growth which shaved 8% of the country’s economy. A record soybean harvest helped tipped the economy into positive growth, but 14 million people remain unemployed and analysts believe the country could slide back into recession. The country is also suffering from severe political uncertainty as the current president, Michel Temer, is embroiled in a corruption scandal that sent stock markets plummeting last month.
Pound bounce back
Earlier in the week the GBP fell 0.5% to a 6 week low of US$1.2770 after projections suggested that the ruling Conservative Party would fail to win a majority in the House of Commons. Conservative PM Theresa May called the election to strengthen her position in the lead up to Brexit negotiations in order to strengthen her mandate. The GBP since bounced back but still remains 0.36% down against the EUR.
UK House Prices
In May UK house prices fell for the third consecutive month, the first such streak since 2009. Prices also dropped 0.2% and the annual growth rate fell to the lowest level in 4 years – 2.1%.
Ildefonso Guajardo, Mexico’s Economy Minister, has said that the US, Canada, and Mexico had “incentives” to wrap up the renegotiation process by 2018, referring to US Midterms and the Mexican Presidential Election scheduled for next year. US Commerce Secretary Wilbur Ross also said that negotiations would be concluded by early January 2018.
Poll says… loonie will dip
A poll by Reuters suggests that experts believe the loonie will dip over the short term to $1.36 CAD (73.53 cents US) before stabilising by year’s end to around $1.35 CAD (74.07 cents US).
Blackberry is back in the headlines, this time for the right reasons. The company’s share price jumped 11% in response to news that the company is ripe for acquisition. Some analysts believe that shares will rise from the current $11.61 to near $20. The company has successfully and almost completely phased out hardware in favour of software.
Record high exports
According to Stats Canada, exports hit a record high in April thanks to greater trade in vehicles and commodities. Exports rose by 1.8% to $47.7 billion.
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