New US Stimulus Checks Rolling Out Could Impact USD/CAD
Major stimulus checks on the level of what was issued last year are nowhere in sight, but some smaller ones are scheduled to be sent out starting July 15th. The IRS is issuing these payments of $300 per child throughout the US. Tens of millions of families are expected to receive their tax credits in the next couple weeks. The payments could spur some serious movement for the currency pairing USD/CAD.
How the New Checks Work
These payments are part of the Reform Child Tax Credit, itself a component of the larger stimulus package called the American Rescue Plan. Payments are expected to go out every month for the next six months to help cover the cost child care and related expenses. However, some people may opt out of these payments, particularly those who believe they will owe money to the IRS come tax season next year.
Most people will not have to do anything to receive these new stimulus checks, as they should be mailed out or directly deposited into citizens’ bank accounts. The tax credit is supposed to help with 12 months of expenses, but only six months of checks will be mailed out initially. The rest will be provided as a lump sum tax credit.
Smaller stimulus checks like this may help to boost the US economy, generating income for thousands of industries. About 88% of families with children are expected to receive these checks, which could be a huge boon for consumer spending industries. We’ve seen stimulus check releases help the US dollar before and benefit the global cryptocurrency.
The Canada Impact
It’s worth noting that Canada has been a major beneficiary of US spending, as a result of US stimulus checks. The pandemic has spurred high levels of spending among US consumers, and a lot of that has flowed over to Canada as a neighboring country.
USD/CAD is bullish right now, reversing last month’s bearish behavior, now coming out of a serious trough in May and working back up toward the highs of earlier this year and late last year. A new round of stimulus checks could do wonders for the US dollar, particularly if those are regularly recurring checks.
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