Last weeks biggest business, currency, and travel stories: We look at the market reactions a week after Trump’s victory, VW slashes jobs, Yellen says the Fed may raise rates “relatively soon”, developing currencies have fallen as a result of Trump’s win, and Canadian Air Miles users could be getting ripped off according to the CBC.
Currency Market Reaction to Trump
A week after the election we had a clearer picture of the market reaction to Trump’s stunning election victory. Despite initially falling against the majors, the USD quickly rebounded and hit a 14 year high against the USD index (a basket of currencies which includes the GBP, JPY, EUR, and other currencies). The MXN has fallen by 12% against the USD, and the CAD has also suffered to a lesser extent.
Volkswagen Slashes Jobs
VW has announced plans to lay off 30,000 workers, the majority of which are in Germany. The company is still reeling from the emissions scandal, and is hoping to refocus on its core brands and new electric and self driving cars. The company employs over 600,000 people worldwide.
Yellen about Rates
Janet Yellen, head of the US Federal Reserve said the Fed could raise interest rates “relatively soon.” Inflation remains below the Fed’s 2% inflation target, but overall economic performance is good. Last December the Fed raised rates from 0.25% to 0.5%, and a similar move could be made early next month. A rise in rates would strengthen the already strong USD.
Trump Bad for Developing Currencies
Despite some initial trepidation, Trump’s victory proved to be a boost for the USD. Developing currencies, however, have not enjoyed a similar benefit. Trump’s protectionist rhetoric and openly confrontational relationship with Mexico have caused many developing currencies to fall, particularly the MXN and BRL (Brazilian real). Until Trump’s policy positions become clearer after he takes power on January 20th, expect uncertainty and pessimism to reign.
Unemployment in the UK has hit an 11 year low. The jobless rate is just 4.8%, with a total of 1.6 million people out of work. Weekly income also increased by over 2%.
Air Miles Not very Rewarding
A report by the CBC has claimed that many Air Miles customers are not receiving their chosen rewards, being left on hold for over an hour, and being bilked by the company.
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