Key events
Introduction: AI boom will produce winners and ‘carnage,’ says tech boss; dollar sinks to four-year lows after Trump comments
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The artificial intelligence (AI) will create winners but there will be “carnage along the way,” the boss of a US technology company has warned.
Chuck Robbins, who runs Cisco Systems which produces IT infrastructure enabling use of AI, told the BBC the technology will be “bigger than the internet”, but the current market is probably a bubble and some companies “won’t make it”.
Robbins said some jobs will be changed by AI, or even “eliminated”, especially in areas like customer services where companies will need “fewer people”, but urged workers to embrace rather than fear the technology.
This comes after a spate of warnings over job losses as a result of the technology, and fears that the boom is a bubble waiting to burst. JPMorgan Chase boss Jamie Dimon has said some of the money invested in AI would “probably be lost”, while Google parent company Alphabet’s chief executive Sundar Pichai said there was some “irrationality” in the AI boom.
The dollar has sunk to four-year lows after Donald Trump brushed off its recent decline, triggering more selling of the US currency ahead of the Federal Reserve’s interest rate decision later today.
The dollar slumped 1.3% against a basket major currencies yesterday, and has slipped a further 0.2% this morning. It has fallen for four days in a row.
The US president said yesterday the value of the dollar was “great,” when asked whether he thought it had fallen too much. Traders interpreted this as a signal to carry on with dollar selling.
The dollar has been under pressure amid Trump’s erratic trade tariffs and foreign policy and as traders brace for a possible coordinated currency intervention by US and Japanese authorities to stabilise the yen’s decline.
The Japanese currency has been rallying since Monday amid talk of the US and Japan conducting rate checks, seen as a precursor to official intervention.
Kyle Rodda, a senior analyst at Capital.com, told Reuters:
It shows there’s a crisis of confidence in the US dollar. It would appear that while the Trump administration sticks with its erratic trade, foreign and economic policy, this weakness could persist.
Markets are expecting no change to interest rates at the Fed meeting, and Trump is not going to like that, having pushed for lower rates over the past year. Analysts said this could inject more volatility into dollar trading.
The US president could announce his candidate to replace Fed chair Jerome Powell soon after the rate decision. The Trump administration’s criminal investigation of Powell and his ongoing attempt to fire Fed governor Lisa Cook are also in focus.
Gold continues to climb, breaking through $5,200 an ounce to a new record high. The precious metal, seen as a safe haven investment in times of political turmoil, jumped 1.7% to $5,278 an ounce.
Last year, gold recorded a 64% gain, the largest annual increase since 1979.
The Agenda
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2.45pm GMT: Bank of Canada interest rate decision (no change expected)
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7pm GMT: US Federal Reserve interest rate decision (no change expected)
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7.30pm GMT: Fed press conference
