Factors That Affect The Forex Market

by Sissy Hall

Many factors affect the Forex Market, but if we need to focus on the main ones, we will certainly talk about the economic tripod, an economic policy guideline for countries that follows 3 aspects, inflation, interest, and the exchange rate.

Do you want to know more about other financial markets? Read also Which Financial Market Is Right For You.

Economic indicators and their impact on currencies

Inflation

Inflation is an indicator of how much our money can buy and how quickly that capacity is lost over time. Currently, countries like Venezuela and Syria face huge annual taxes on inflation. This means that your currency cannot be trusted and quickly depreciates against strong currencies like US dollars or assets like gold.

The economy is an inflationary process by nature, so small rates of inflation are natural in any country. Negative inflation, taxes also represent a problem indicator, because it means that economic activity is weak and factors of production are underemployed.

Interest Rates

The second very important part of this tripod is interest rates, in other words, how much some government or society can pay to acquire money or induce capital inflow.

Since it is unlikely that anyone can control inflation in the real economy, most central economic regulators try and take care of their economic procedures by making some changes in interest rates on their government bonds.

In an open market economy, there is communication with agents every time the government increases or decreases its interest rates on this asset. Stronger economies have lower interest rates and longer periods to pay, but developing economies need to offer higher rates to attract the same (or even less) amount of capital.

Exchange Rates

Finally, our tripod is complete after analyzing exchange rates. Represents the amount of one currency needed to buy another.

The US dollar is usually a strong reference, like the euro. More recently, we have experimented with the exchange rates of unregulated currencies, such as cryptographic currencies ( Bitcoin, Ethereum etc. ).

In short, it is money that makes our daily lives easier, but in the end, it is just another product with special features. Therefore, it can be traded, accumulated, borrowed and so on. On an international scale, this creates a world market for currencies.

Other Factors To Consider

If we are interested in other factors that may influence foreigners, we can consider a group of real factors, such as Production, Employment, and Gross Domestic Product (GDP).

These elements represent how strong the economy is and its ability to generate value and wealth. While economic activity is slow, it sends bad signals to the financial market, contaminates its investors, and interferes with the mood of brokerages.

Going to the other economic sphere, in the pure financial economy, there are factors including speculation, worldwide trade associations, and government debts. These are important factors to be recognized when committing to Forex.

These points have strong relationships with expectations and information flow. Its impacts can be felt very quickly and very deeply, especially in our current society, with so many channels of communication.

The market climate can easily change with a tweet from an important president or a leak of information in the media. It is very important to know that high risk and high return investments are a multifactorial business.

Human cognitive ability is limited to deal with this complexity, so technology has come to help and improve our ability to act correctly. If you want to trade forex, start with trusted forex brokers. They are highly trained to analyze economic factors that impact the forex market.

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Taxes For Freelancers: Sales Tax

by Sissy Hall

There are many programs available to assist freelancers with bookkeeping. Alternatively, you can hire a tax preparation service to do all the hard work for you.

In addition to income tax, sales tax is an important tax for freelancers and their business. This is levied on almost all goods and services and is, therefore, a value-added tax from an economic point of view. As a freelancer, however, you are not allowed to withhold this additional amount through sales tax but have to pay this sales tax directly to the tax office.

Freelancers and Taxes: Input Tax

For freelancers, the counterpart to sales tax is input tax. Because freelancers who collect sales tax are allowed to offset it with what is known as input tax. This is included in all expenses that were made for your own independence.

The input tax is determined as follows: In order to be able to offer one’s own services, the goods or services of other companies are usually used. The supplier will also invoice you a sales tax for this. Freelancers can claim and offset this sales tax amount as input tax against their own sales tax. Here is a sample calculation for input tax.

Tax return for freelancers

For freelancers, the bookkeeping according to the income-surplus-invoice (EÜR) comes into question. It is a simplified method of determining a company’s profit. In general, all companies that are not registered in the commercial register can use the income-surplus-calculation.

For the EÜR, all actual incoming and outgoing accounts are to be noted in a so-called journal. If the freelancer wants to calculate taxes and do his bookkeeping according to the income-surplus-account, he should structure his income and expenses according to the types that he incurs and use the official EÜR form.

Examples of income of the EÜR in the journal are the operating income at the full sales tax rate as well as the reduced sales tax rate, but also the sale or withdrawal of fixed assets and the private use of the company car represents income in the sense of the EÜR. Examples of expenditure by the EÜR in the journal are the Costs for office supplies and the study, entertainment costs, depreciation, or even the tax advisor.

If you, as a freelancer, determine taxes and want to do the EÜR, you must always show the amounts in the EÜR as a total amount, i.e. without sales tax or input tax. A monthly balance must be created in the journal. The values ​​of the individual categories are then to be transferred to the form for the income surplus invoice, which must then be attached to the tax return if the profit is over 17,500 euros per year.

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A Quick Look at the Differences of PPP in the HEROES Act vs. HEALS Act

by Paden Kegan

While the House of Representatives passed a 4th coronavirus relief bill last May, the Senate House did not put it up for review before Congress went into an August recess. Instead, the Republican majority passed its own version, calling it the HEALS Act, as opposed to the Heroes Act passed by the House in May.

The first distinguishing aspect about the Republucan’s HEAL Act is that the amount being pushed for by the Senate is only $1 trillion, which cuts down the $2.2. trillion of the original CARES Act. In contrast, the House of Representatives is proposing to increase the stimulus fund to $3 trillion.

Although many of the states in the U.S. opened their economies much earlier than what health experts recommended as safe, the premature opening failed to launch many businesses on the road to recovery. The economy hardly improved as the disregard for safe distancing measures only resulted in the rapid increase of COVID-19 infection cases and deaths in most states.

Many commercial establishments also suffered as a result of the protest movements combined with the looting and burning incidents instigated by agitators. Although millions were able to go back to work, millions also lost their jobs. Most nonessential businesses had to close shop again, especially in regions where on a daily basis, tens of thousands had been testing positive with the coronavirus disease.

Congress is about to put the two proposals up for deliberation and hopefully for finalization next week when sessions reconvene. Yet it appears strong oppositions coming from both sides will slow down the legislation processes. A number of Democrats are not too keen on approving additional funds for the contentious Payroll Protection Program (PPP), since reports have it that large take outs went to companies that did not meet the eligibility criteria.

Currently, more than $100 billion of the PPP funds lay unclaimed. Many small business owners are wary that the present on and off reopening will make it difficult for them to meet the forgiveness feature of the PPP loan.

Differences in PPP Proposed by HEROES Act vs. HEALS Act

Inasmuch as the PPP dole outs have been reported as faulty, and with $100 billion still available, House Democrats are not proposing additional funding for the program. Nonetheless, their Heroes Act recommends the elimination of the 75% payroll requirement as forgiveness criterion, whilst moving the application deadline up to December 31, 2020.

On the other hand, the HEALS Act of the Republicans intends to inject an additional $190 billion to the present PPP fund balance. Moreover, if the HEALS Act PPP passes both Houses, eligibility requirements will be expanded in order to qualify those disqualified under the CARES Act. Although the HEALS Act also proposes the elimination of the 75% payroll expense requirement, it also wants to expand fund usage that will qualify PPP borrowers for forgiveness.

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