Fitch loses faith in US economy

The Fitch credit-rating agency has announced a negative debt rating for the US economy, keeping it at AAA, the Associated Press reports. It also has doubts on realization of measures to reduce the budget deficit.

The agency explained the forecast was due to the growth of state debt, the low economic rate and the inability of Congress to reach a compromise on the budget deficit. The negative forecasts mean that there is a 50% chance of a lower rating in the next 2 years.

The US Congress failed to reach a compromise on reduction of the state budget by $1.2 trillion last week. The Republicans insisted on reducing healthcare expenses and increasing the pension age. The Democrats insisted on higher taxes for the richest Americans. The Republicans replied that such step would force business to stop creating jobs, aggravating the 9% unemployment rate.

Congress and the White House lifted the state debt limit to avoid a market crash. Standard & Poor’s reduced the US rating from AAA to AA+.

January futures for WTI (Light Sweet Crude Oil) in New York dropped by $0.5 or 0.51% to $97.710 per barrel. January futures for Brent dropped by $0.1 or 0.09% to $108.9 per barrel, RIA Novosti reports. The drop started after dramatic rise of prices by $1.44.

Publications of economic forecasts of the Organization for Economic Cooperation and Development strengthened the euro. It reached $1.3320, compared with $1.3239 on Friday. The dollar increased to 77.96 yen, compared with 77.74 yens at the end of previous trade.

Despite negative forecasts, US President Barack Obama assured EU leaders that the US will help them with the crisis, Deutsche Welle reports. Obama met President of the European Commission Jose Manuel Barroso and President of the European Council Herman von Rompuy. Catherine Ashton, High Representative of the Union for Foreign Affairs and Security Policy, US Secretary of State Hillary Clinton and Secretary of the Treasury Timothy Geithner took part in the meeting. The US expressed readiness to provide support and make steps towards financial stability.