The Euro US Dollar exchange rate has slumped today, owing to USD strength following an economically appealing statement from Donald Trump.
Euro Softens despite Italian Stats, Trump’s Tax Promises Boost US Dollar
The Euro has ceded gains to the US Dollar today, falling by a small amount in the pairing on the news that the Greek debt crisis is showing no signs of going away.
Although Italian industrial production figures for December have risen against forecasts, French postings for the same field have dropped to -0.9% and the Greek debt issue has been an ever-present limiter on the Euro throughout.
Heavy Euro Losses Forecast if No Greek Debt Plans are Made before February 20th
The next major source of influence for the Euro US Dollar exchange rate will come later in the month, when key deadlines in the Greek bailout talks come on February 20th.
In a situation bearing strong echoes of 2015’s ‘Grexit’ crisis, Greek officials remain at odds with their creditors, having been caught between implementing harsh austerity measures and desperately attempting to revitalise flagging industries to get income rolling back in.
If no compromise is found between the Greek government and its diverse array of creditors, then demand for the Euro is expected to plummet. This is because with major Eurozone elections taking place after the 20th, the Greek debt issue will likely become a lot harder to focus on as part of an increasingly hectic schedule for Eurozone officials.
Future US Dollar Euro Demand Tied to Trump’s Tax Plans
While the exact details behind Trump’s promised ‘phenomenal’ plans for US taxes are unknown, some hints can be gleaned from promises made during the 2016 Presidential Election campaign.
The core fundamentals of Trump’s plans are to enable ‘tax relief for middle class Americans’ and ‘simplify the tax code’, as well as use reforms which ‘don’t add to our debt and deficit’.
While this sounds positive on paper, Trump’s provisional strategy for making the reforms work was to attempt to get US companies operating overseas to repatriate their operations back to the US, with a one-time cost attached.
The plan also aims to make it harder for US businesses to outsource, by ending a previous tax deferral system for corporate incomes earned abroad.
If Trump’s supposedly spectacular plans go along these lines, it could be a tense moment for US Dollar investors, as such rulings would reinforce the notion that the US is turning increasingly inwards due to the President’s protectionist bent. High USD volatility could be seen as investors would have to decide whether turning in is a better plan than reaching out.
Recent Interbank EUR USD Exchange Rates
At the time of writing, the Euro US Dollar (EUR/USD) exchange rate was trending in the region of 1.06 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.94.
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