President Trump's "Revenge Tax" the latest headache for investors..
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| In 2024, the US Dollar reached its highest levels since 2002. A huge reason for this was foreign investment coming into the country. Foreign investors bought record amounts of US bonds and stocks, as the country's strong economy promised large returns.
However, a section of the "One Big Beautiful Bill Act" due to be signed on July 4th, will likely change what at least some investors do with their money..
A 20% tax on passive income such as dividends, interest and royalties earned by foreign investors from countries identified as having "discriminatory" tax regimes against US firms, is expected to accelerate the "Sell America" trade days and see an influx of investors put their money elsewhere.
Less people buying the USD or anything USD related will devalue the currency, as easily seen so far this year. Something to keep a keen eye on for those with USD exposure, as more good times could be ahead.
This has favoured the Euro, as the currency has been re-established as a safe-haven currency this year with Europe promising strong returns of its own. Further enhancing the Euro in recent days has been the re-escalation of US trade wars versus Europe and China.
The main data release this week comes from the ECB on Thursday with their latest and perhaps last interest rate cut of the year. Inflation data released earlier today showed EU inflation is now below target with core inflation easing to just above target. The comments after the result could be an interesting watch.. |
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