Meta slammed over antitrust allegations by EU over violation of pay-or-consent model. America’s hesitation about the tax reform could potentially waste all the effort and time that has been done so far. The US Dollar drops sharply to a multi-week low. Keir Starmer becomes UK’s Prime Minster as Labour Party has a landslide victory. All this and more in this week’s (or the date) issue of the FXParkey Newsletter.
FXParkey Newsletter July 1st Week Edition
Tax Reform Hits Roadblock
The landmark international tax reform agreement, headed by the OECD and endorsed by over 130 countries, now faces an uncertain future as US support wavers. This ambitious plan aims to ensure large multinational corporations pay their fair share of taxes globally, but its implementation is in jeopardy due to America's apparent cold feet.
The agreement consists of two main pillars: reallocating taxing rights to market jurisdictions and establishing a 15% global minimum corporate tax. However, concerns about potential revenue loss, political challenges from Republicans, and the need for Senate approval have led to US hesitation. This shift threatens to derail the entire agreement and could result in a resurgence of unilateral digital services taxes and potential tax disputes worldwide.
Dollar Slumps on Rate Cut Hopes
The U.S. dollar experienced a sharp decline as recent economic data fueled expectations of potential interest rate cuts. Weaker-than-expected inflation figures and signs of cooling in the labor market have led investors to bet on a more dovish Federal Reserve stance.
The dollar index, measuring the greenback against major currencies, fell to multi-week lows. Bond yields also dropped as markets priced in higher odds of rate cuts in the coming months. While the Fed maintains a cautious outlook, the shifting economic sphere is reshaping currency markets and monetary policy expectations.
CFTC's Legal Gambit Backfires
DUE TODAY: Public comment regarding Notice of Intent to Extend Information Collection 3038-0115, Reparations Complaint, CFTC Form 30. https://t.co/r1deF8O5Oe pic.twitter.com/95tgiDMczx
— CFTC (@CFTC) July 1, 2024
The Commodity Futures Trading Commission (CFTC) faces scrutiny over its case against My Forex Funds, as allegations of staff misconduct threaten to undermine the regulator's position. CFTC Commissioner Caroline Pham has called for immediate action to address claims of false statements made to the court.
The controversy raises questions about the CFTC's handling of the case and could potentially impact its outcome. My Forex Funds' legal team is seeking sanctions against the CFTC, citing “bad faith” actions. This development highlights the challenges regulators face in enforcing rules in the complex sphere of retail forex trading.
GBP/JPY Soars to New Heights
The GBP/JPY currency pair has surged to a 16-year high, reaching levels not seen since 2008. This dramatic rise reflects diverging economic outlooks and monetary policies between the UK and Japan. The Bank of England's hawkish stance contrasts with the Bank of Japan's continued ultra-loose policy, driving investors towards the pound.
Technical indicators suggest the pair may be overbought, potentially signaling a correction. However, the overall uptrend remains strong, with traders eyeing the psychological 205.00 level. This currency rollercoaster highlights the volatile nature of forex markets and the impact of central bank policies.
Labour Secures Landslide Victory
The UK Labour Party has secured a resounding victory in the parliamentary elections, marking a significant shift in British politics. Led by Keir Starmer, Labour won an overwhelming majority, ending years of Conservative rule. The election results reflect a growing public desire for change and dissatisfaction with the previous government's handling of key issues.
Vote Labour Thursday 4 July. pic.twitter.com/CZbK7nxGMT
— The Labour Party (@UKLabour) May 22, 2024
Starmer is set to become the next Prime Minister, facing challenges including economic recovery, healthcare reform, and redefining Britain's global role post-Brexit. The decisive win gives Labour a strong mandate to implement its policy agenda and reshape the country's direction.
And that wraps it up, this week’s top news at your fingertips. For any inquiries or feedback, feel free to contact us.
