"The affirmation of the US 'AAA' sovereign rating reflects the fact that the key pillars of US's exceptional creditworthiness remains intact: its pivotal role in the global financial system and the flexible, diversified and wealthy economy that provides its revenue base," Fitch said in its statement.

"Monetary and exchange rate flexibility further enhances the capacity of the economy to absorb and adjust to 'shocks'."

However, Fitch warned the outlook for the rating depended on the economy and the political process in Washington to reduce the public debt.

It said an upward revision to medium to long term projections for public debt either as a result of weaker than expected economic recovery or failure of the joint committee to agree on at least $1.2 trillion in deficit reduction would likely put the United States on negative outlook.

The affirmation of US AAA rating also helped to push USD/CHF above the .7800 level as some of the risk aversion flows that pressured the pair earlier in the overnight session disappeared with the Swissie rising to .7850 from a low of .7768.

On the economic front the better than forecast US Industrial Production and Capacity Utilization figures also helped to stem the tide of selling as they printed at 0.9% versus 0.5% and 77.5% versus 77% respectively. Overall however, the economic data and the reaffirmation of the US AAA rating had only a minor impact on currency trade as all eyes in FX remain focused on the Sarkozy/Merkel summit scheduled to begin at 14:00 GMT today.
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Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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