Traders and investors are looking to global interest rate cuts and the closely-fought US election to bring the world’s currency markets out of their deepest lull in almost four years.
Tax reform should aim for sustainable finances and economic equity. Personal income tax should include taxing family income, with a tax-free bracket of €25,000 per individual or €50,000 per family. A flat 20% tax on all personal income above the tax-free bracket is proposed. Corporate tax should be leveled at 20% to be competitive and fair. A fair tax on immovable property is suggested to combat tax evasion and incentivize property owners to rent out vacant properties. VAT rates can be adjusted, and a flat road tax per car is recommended to cover road infrastructure costs. Carbon emission taxes should be imposed on fuels to fund carbon reduction and renewable energy initiatives.
The EURUSD pair is rising for the third day in a row, reaching a one-and-a-half-week high in Asian trading. The US Dollar is weakening due to uncertainty about the Federal Reserve’s rate cut path and a positive risk tone in the market. However, expectations of an interest rate cut by the European Central Bank in June could limit further gains for the currency pair.
Fact: European Union countries’ budget cuts have resulted in reduced staff in public administration and delayed training or introduction of new technologies.
Russia’s benchmark stock index reached its highest level since February 2022 on Monday, while the rouble also strengthened slightly against the U.S. dollar. The MOEX Russian index rose 0.9% to 3,361.5 points, the strongest since Feb. 24, 2022. The dollar-denominated RTS index also increased by 0.9% to 1,147.5 points. The rouble was 0.2% higher at 92.29 to the dollar. There are concerns of potential weakening in the rouble in the upcoming days due to the end of a favorable month-end tax period and possible demand for dollars and euros in the U.S. and Europe after Easter. The rouble also saw changes against the euro and yuan. Brent crude oil, a key export for Russia, dropped 0.3% to .71 a barrel.
Inflation in the euro area has declined from high levels in recent years, with a rate expected to be 2.3% in 2024 compared to 8.4% in 2022 and 5.6% in 2023. The European Central Bank (ECB) is discussing the concept of inflation tolerance as a way to navigate uncertainty and provide guidance on when action will be taken based on inflation levels. The ECB may consider setting an inflation range within which no action is needed, with action required as inflation approaches 3%. This approach aims to balance the need for a precise inflation target with the reality of uncertainty in the economic system.
The EURUSD pair maintained its position around 1.0770 on Friday, facing downward pressure due to the European Central Bank officials suggesting a probable interest rate cut in June. Weaker-than-expected retail sales data from Germany also contributed to the Euro’s decline. Meanwhile, the US Dollar Index (DXY) strengthened, nearing 104.60, driven by annualised economic expansion in the United States and hawkish statements from a Federal Reserve official.
The European People’s Party (EPP) nominated Ursula von der Leyen for another term as European Commission President at their congress in Bucharest. Mario Draghi, former Italian Prime Minister and President of the European Central Bank, is considered the favorite for the position of Commission President based on his leadership during the world economic crisis and transformation of Italy.
Britain’s economy entered a shallow recession last year, with GDP shrinking by 0.1% in the third quarter and 0.3% in the fourth. The economy is expected to grow by just 0.25% this year, with inflation moving towards the point where the Bank of England can start cutting rates. Household real disposable income grew by 0.7%, prompting consumers to potentially increase spending and support the economy. The current account deficit in the fourth quarter was 21.18 billion pounds, equivalent to 3.1% of GDP.
Fact: Police officers are over-reliant on messaging application Viber due to the lack of an official electronic communication method.