AI Boom Will Create Winners and 'Carnage', Warns Tech Boss as Dollar Plunges
Good morning and welcome to our rolling coverage of business, financial markets and the global economy. The artificial intelligence revolution will undoubtedly produce winners, but there will be significant 'carnage along the way', according to a leading US technology executive. Meanwhile, the US dollar has tumbled to four-year lows following comments from former President Donald Trump, creating volatility ahead of today's crucial Federal Reserve interest rate decision.
AI Market 'Probably a Bubble' with Job Losses Expected
Chuck Robbins, chief executive of Cisco Systems, has delivered a stark warning about the artificial intelligence boom, describing it as 'bigger than the internet' but cautioning that the current market enthusiasm represents a probable bubble. Speaking to the BBC, Robbins explained that while AI will transform industries, not all companies investing in the technology will survive the coming shake-up.
'Some companies won't make it,' Robbins stated bluntly, highlighting the competitive landscape ahead. His comments echo concerns from other financial leaders, including JPMorgan Chase CEO Jamie Dimon, who has warned that some AI investments will probably be lost, and Alphabet chief Sundar Pichai, who has noted 'irrationality' in the current AI frenzy.
The Cisco boss addressed the significant impact on employment, predicting that AI will change or eliminate certain jobs, particularly in customer service sectors where companies will require fewer human workers. However, Robbins urged employees to embrace rather than fear the technological shift, emphasising adaptation as key to navigating the coming changes.
Dollar Sinks to Four-Year Lows After Trump Comments
The US dollar has experienced a dramatic decline, falling to its lowest level in four years after Donald Trump appeared to dismiss concerns about its recent weakness. The currency dropped 1.3% against a basket of major currencies yesterday and has slipped a further 0.2% this morning, marking four consecutive days of losses.
When questioned about the dollar's decline, Trump described its value as 'great', a comment that traders interpreted as tacit approval for continued selling pressure. This comes amid broader concerns about US economic policy, including erratic trade tariffs and foreign policy decisions that have undermined confidence in the currency.
Kyle Rodda, 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.'
The dollar's decline has been exacerbated by speculation about potential coordinated currency intervention between US and Japanese authorities to stabilise the yen, which has been rallying since Monday. All eyes are now on the Federal Reserve's interest rate decision later today, with markets expecting no change to current rates despite Trump's previous calls for monetary easing.
Gold Soars to Record High as Safe Haven Demand Grows
Amid the currency volatility and political uncertainty, gold has surged to unprecedented levels, breaking through $5,200 per ounce to reach a new record high. The precious metal, traditionally viewed as a safe haven during times of economic and political turbulence, jumped 1.7% to $5,278 an ounce.
This continues an extraordinary rally for gold, which recorded a 64% gain last year – its largest annual increase since 1979. The surge reflects growing investor concern about currency stability and broader market uncertainty.
Today's Economic Agenda
Key events to watch today include:
- 2.45pm GMT: Bank of Canada interest rate decision (no change expected)
- 7pm GMT: US Federal Reserve interest rate decision (no change expected)
- 7.30pm GMT: Federal Reserve press conference
Additional focus remains on the Trump administration's ongoing scrutiny of Federal Reserve leadership, including a criminal investigation into chair Jerome Powell and attempts to remove Fed governor Lisa Cook. These developments could inject further volatility into currency markets as traders assess the implications for US monetary policy independence.
