As the United States continues to focus on tax cuts, a new concern is concerning the impact of tax cuts on US Dollar May Rise on Wuhan Virus Risk Ahead of White House Budget Debate. Just as political battles frequently drive USD/JPY, and currency wars routinely result in policy changes, these debates are often bad for currency but they may also lead to negative policy shifts. Here are some questions that you need to ask to determine if taxes and spending plans have an impact on the currency.
We’ve already seen the domestic policy changes brought by the White House Budget Debate. The question is whether or not these policies will have an impact on USD/JPY and the USD/CHF and if so, how?
During the Presidential Debates, White House Chief Economic Advisor Lawrence Summers said: “In terms of tax cuts… the Treasury Secretary will not be forced to adopt a large number of tax cuts in this budget.” While this is good news for US Dollar, I wouldn’t say it’s good news for US Dollar! The Treasury Department will most likely go ahead with its long-term debt management program as outlined in the “Memorandum of Understanding” with the Congress.
An idea floated in relation to the Debt Ceiling issues and the tension between Democrats and Republicans was whether or not a “Greenspan Rule” should be imposed on future interest rate increases. In the light of this, I wonder if Summers’ statement constitutes a threat of cutting the interest rates.
The Federal Reserve’s Chairman Ben Bernanke said, “The federal funds rate should be used only as a policy tool to combat recessions and inflation”. So, Mr. Bernanke, who is to decide which actions will be taken with regard to the Federal Funds Rate and when?
Japan is experiencing deflation. This has caused some USD/JPY to drop to historic lows. The question is if Japan’s deflationary policies are creating a USD weakness that will negatively impact USD/JPY and vice versa.
With the U.S. to tighten up on budget deficits, I wonder if the Obama Administration will be prepared to proceed with an Extra Financial Stimulus Package. If there is an expectation that the US Treasury may have to resort to the debt limit, the question will be how the Federal Reserve or other major players in the market will react?
The US Dollar could be setting for some new highs and lows, depending on whether the Fed starts to tighten up. Therefore, it is necessary to ask how the Fed will react to these events.
Is the Dollar Set For Some New Highs and Lows? Now that the presidential debates are over, I wonder if the dollar is set for some new highs and lows? The fact is that the USD is already headed for some new highs, and maybe some new lows!
If we use our common sense, we can’t discount the possibility that these developments could send the Dollar Higher than it has been for many years. If the debate over taxes leads to a USD strengthening, then it is more likely that the dollar may rise on the impact of these policies.
If the Dollar is set for some new highs and lows, it’s important to note that the US Dollar Index (DXY) has already reached record highs, and certainly has never been as high as it is today. If the Dollar is Set For Some New Highs And Lows, it is important to note that the US Dollar Index (DXY) has already reached record highs, and certainly has never been as high as it is today. So, what are your thoughts on the implications of these developments?