US Credit Rating is Stable; Outlook is Still Troublesome

DailyForex.com Team

Global speculation about whether the US would default on its loans ended today as President Obama signed a debt-limit compromise plan which will raise the nation's debt ceiling until 2013 and reduce spending by over $2 trillion during the next 10 years. On the heels of this compromise, the respected rating companies Moody's and Fitch Ratings both decided to keep the country's debt rating at AAA, though both ratings agencies retained a negative outlook on the rating which could spell trouble for the US in the next 12-18 months if things don't improve quickly. It has yet to be seen whether the third global ratings agency, the S&P, will maintain the highest ratings for the US or will downgrade the country's ratings.

Although the US markets were already closed by the time Moody's announced its decision, the Dollar fell to an all-time low after Fitch's announcement, though it did hold steady against the Euro. US stocks also plummeted, falling 2.6 percent and erasing all of its gains for the year. This loss followed seven consecutive days of losses which were likely the result of a decline in consumer confidence before today's vote. It also created the longest losing streak in the US stock market since Q3 2008.

There's no question that although the US debt crisis averted a debt default in the immediate, the crisis is far from over. Not only does the bill threaten to slow economic growth in the country, but it promises only minimal debt reductions, which won't likely provide the long term economic reinforcements that the country so desperately needs.

Although the upcoming non-farm payroll report is likely to show a slight improvement as compared to last unemployment figures, analysts are predicting that this development may be short lived as the new bill slowly takes effect.

DailyForex.com Team
The DailyForex.com team is comprised of analysts and researchers from around the world who watch the market throughout the day to provide you with unique perspectives and helpful analysis that can help improve your Forex trading.

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