The USD is a favorite currency among traders, and for good reason. First and foremost, currency is the most in demand asset in the world. This causes quite a bit of volatility as there is always something going on in the currency market. However, the USD goes a step beyond that. You see, the USD is the currency that’s representative of the world’s largest economy. This leads to stronger demand for the currency and even more volatility, or for traders, opportunity.
Well, at the moment, there’s a major topic of discuss that could lead to major economic changes in the United States. Since a currency is only as strong as the economy it represents, this could lead to wild fluctuations in the USD. Today, we’ll talk about the one factor that’s leading to a big discussion, how this factor could lead to massive changes in the USD, and what binary options traders should be watching for ahead.
The big story – Donald Trump’s 1-page tax plan
One of the biggest promises that Donald Trump made on the campaign trail was a promise to reform the tax system in the United States. For some time now, everyone’s been waiting to see his plan, and when they did, well, it didn’t do much to excite. You see, when the tax plan was released, it was only a 1 page document. While the concepts of the tax plan are incredible on both the business and personal side, how the plan would be accomplished was not offered, leading to uncertainty. All in all, here are the key points from the plan…
- Flat Business Tax – Businesses will pay a flat tax of 15% no matter how large or small they are. This should largely reduce taxes on businesses, leading to more funding for economic growth in the United States.
- Simplified Personal Taxes – President trump also intends on getting rid of most write offs on the personal side of the equation. Instead, everyone will be grouped into one of 3 brackets. The 10%, 25%, and 35% tax brackets. In doing so, the plan will reduce taxes while making filing taxes a more simple process.
- Investing And Fund Repatriation – Finally, the tax plan included bullet points associated with reducing taxes on money earned through investing as well as reduce the taxes businesses pay when they bring their money back into the United States.
How this could lead to waves in the USD
As mentioned above, a currency is only as strong as the economy it represents. While there is a big discussion surrounding whether or not President Trump will be able to accomplish his goals here, one thing is for sure, if he makes it work, the economy is likely to grow, leading to gains in the USD. However, if this doesn’t work, it will likely be a psychological hit to the US economy, driving the USD downward.
What traders should be watching for ahead
Moving forward, there’s no doubt that the USD is going to present several opportunities for traders to take advantage of. However, in order to take advantage of these opportunities, you’ll have to keep a close eye on the news. In particular, continue to follow breaking developments surrounding President Trump’s tax plan for the year 2017. As mentioned above, this story has the potential to move the USD in a big way.