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CFD Trading Rate Air Liquide (EURONEXT) (AI)
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28.11.2024 00:21US expected to unveil further AI chip sanctions against China on Monday
The US is expected to announce another set of measures on Monday designed to further restrain China's ability to develop advanced artificial intelligence, per WIRED.
The measures might include sanctioning dozens of Chinese companies that produce semiconductor equipment, as well as imposing limits on a few chip manufacturing factories, some of which are linked to the Chinese tech giant Huawei.Market reaction
At the time of writing, the AUD/USD pair is trading 0.01% lower on the day to trade at 0.6497.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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20.09.2024 12:21BoC's Macklem: AI could destroy more jobs than it creates
Bank of Canada Governor Tiff Macklem said on Friday that the adoption of artificial intelligence (AI) could add to inflationary pressures in the near term, per Reuters.
Key takeaways
"AI, combined with a more shock-prone world, means inflation could be more volatile than it was in the 25 years before the pandemic."
"Central banks need to be closely attuned to how AI is affecting inflation, both indirectly and directly."
"AI is expected to boost productivity; when labor productivity is rising, the economy can grow more quickly without causing inflation."
"AI could destroy more jobs than it creates, and people may struggle to find new opportunities; this is a concern for us all."
"We don’t have much evidence that labor is being displaced by AI at rates that would lead to declines in total employment."
"AI adoption could also lead to financial stability issues; operational risks could become concentrated in a few third-party service providers."
"There is huge potential for central banks to use AI to understand how consumers and businesses are behaving."
Market reaction
These comments failed to trigger a noticeable market reaction. At the time of press, USD/CAD was virtually unchanged on the day at 1.3565.
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