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How Forex Traders Can Profit From US Tax Overhaul
Written by: PaxForex analytics dept - Thursday, 21 December 2017 0 comments
US President Donald Trump scored a much need victory as Republicans passed the biggest US tax overhaul in history. The House of Representatives approved the bill yesterday after the Senate pushed it through previously. Overhauling the tax code was one of the biggest campaign promises of President Trump who stated that ‘It hasn’t been done in 34 years, but actually hasn’t been done, because we broke every record. We’re not going to lose our companies any more. They’re going to stay in our country.’. This tax overhaul is sometimes compared to the one which President Ronald Reagan passed in 1986.
A lot of work went into the tax overhaul and the final version is not yet clear. President Trump discussed the tax overhaul 18 times in public since late summer and made over 100 calls with members of congress while Vice President Pence attended 40 tax related events in order to gather support for the overhaul. The President’s daughter, Ivanka Trump, hosted dinner parties for members of Congress at her home and met with over 20 lawmakers in order to assist her dad. Gary Cohn, the National Economic Council Director, and Steven Mnuchin, the Treasury Secretary, also met with over 260 lawmakers in regards to the tax overhaul.
As the White House celebrated the victory, President Trump told reporters that ‘It’s always a lot of fun when you win,” Trump said. “If you work hard and lose, that’s not acceptable.’. Initially the US President wanted to cut corporate taxes down to 15%, but made a compromise for a 22% tax rate. The final overhaul is set to cut the corporate tax rate down to 21%. Public opinion for the biggest US tax overhaul is muted as only 24% of those polled responded favorably to the bill. While the administration stressed that this will benefit the middle-class, many remain very scepticle and believe it will only boost saving for the upper-class as well as Corporate America.
The ripple effects of the US tax overhaul will be felt across asset classes and forex traders are likely to witness an increase in volatility, especially in the US Dollar. Follow the PaxForex Fundamental Analysis section as well as Trading Recommendations in order to receive vital trading information which will help you navigate the forex markets and boost your overall profits.
President Trump is now scheduled to sign the tax overhaul into law on January 3rd 2018. The slight delay was due to technical reasons in order to make sure that automatic spending cuts for several programs, including Medicare, will not be triggered. The administration initially said that that the bill would be signed before Christmas. Since the tax overhaul was classified as a deficit increasing measure which will add $1.5 trillion to the US debt burden over the next years, it was necessary to delay the signing into 2018 in order to avoid automatic cuts under the PAYGO rule. Despite the slight delay, this was a much need victory for President Trump and here is how forex traders can profit from the US tax overhaul.
haven status of the Swiss Franc is expected to benefit. This currency pair is currently trading lower inside a bearish price channel after its horizontal resistance area rejected further upside. Price action is now drifting higher and into its descending resistance level from its bearish chart pattern. Forex traders are advised to enter their sell orders inside the 0.9900 and 0.9950 area.
The CCI is trading below the 0 mark which confirmed a momentum shift from bullish to bearish. Sideways trending could see this indicator cross the 0 barrier in both directions on several occasions before making its final move lower. Download your PaxForex MT4 trading platform today and take advantage of the profit potential in the USDCHF.
A smart hedge to the above outlined short position is a long position in the USDZAR. While the US Dollar is set for a volatile 2018, the South African Rand is predicted to have an even tougher future ahead. This trade is perfect for all US Dollar bulls who are looking for great upside potential with limited downside. This currency pair is depleting bearish pressures inside of its newly formed horizontal support area from where a price action reversal is favored following a breakout. Buy orders should be placed below the 12.7000 mark in order to maximize profit potential.
The CCI is trading below the -100 mark which indicates extreme oversold conditions, but has recovered from its lows and enjoys solid upside momentum. A breakout above the -100 level should push this currency pair to the upside. Open your PaxForex trading accountand add this trade to your portfolio before the breakout occurs.
A less risky way to profit from the fallout of the US tax overhaul is a long position in Silver. Many usually flock to the Gold trade in order the diversify risk and hedge currency positions, but Gold’s smaller sister offers forex traders a lot less volatility with similar diversification as well as hedging benefits. Silver already completed a breakout above its horizontal support area and is expected to continue its advance until it can challenge its next horizontal resistance area. Any pull-back to the upper level of its horizontal support area should be taken full advantage off.
The CCI has advance together with the breakout and crossed the -100 mark as well as the 0 mark which confirms the bullish momentum change in this commodity. PaxForex offers new traders as well as seasoned professionals the best trading conditions which promotes transparency and fosters portfolio growth.