FX.co ★ Fundamental Analysis, July 28, 2011

United States reached its peak in May of USD 14 300 M federal debt. And it is up to Congress to take a new law before the August 2 (two weeks) to raise the limit. Or otherwise?

That is why Moody's placed under review its rating of "AAA" or "risk free", wondering about the current credit rating and may lead to "AA". This means you could lose the AAA rating, the rate is "risk free". To fall rating of the world's largest economy? We think not because there should be an agreement before, but also believed that Lehman Brothers could ever break.

Republicans and Democrats are debating these days where it cut costs and raise the debt limit. The United States spent more too long, and now has to make adjustments in the worst way, as often happens in these cases. Failure to do so enter into default. What you like least about the market is uncertainty. And nobody wants to imagine that scenario.

With no agreement until the day of the date, the Treasury secretary formally notified Congress that the government would slow its investment in two federal pension plans not to exceed the loan limit. The government could well cope with accounting maneuvers to August 2. After that date, may file for suspension of payments for the first time, which would threaten the national credit rating and the dollar.

The political crossroads not long in coming. Republican leaders in the House of Representatives have said they will not increase the debt ceiling, unless the government of President Barack Obama will accept the first major spending cuts to reduce long-term liabilities.

U.S. debts are about 100% of Gross Domestic Product (GDP). The budget deficit is over 10% of GDP, which speaks of weak fundamentals.

The Chairman of the Fed knows that America can not continue this path of unsustainable debt, which would have higher mortgage interest rates than a medium-term economic growth. But Bernanke and Obama are both concerned if no agreement is reached. At stake is the confidence of foreign creditors and fiscal and financial security of the world's largest economy.

On the other hand today's initial jobless claims and home sales are built two major publications in the U.S. today, while the EU published figures for consumer confidence.