"Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government"
-Jack Lew, US Treasury Secretary
A government shutdown? Last-minute budget deal? Everyone though that the world's largest economy has gone through all its political disputes, and the fact politicians managed to approve this year's budget was suggesting the economy will prosper this year. This week Obama's administration warned that the United States can start defaulting on its obligations "very soon" after the government runs out of room to borrow money under the legal, revised cap on public debt.
U.S. Treasury Secretary Jack Lew said the limit will be reinstated on February 7, while treasury's reserves are projected to get exhausted quickly due to the fact it issues annual income tax refunds. According to these projections the $16.7 trillion ceiling will be reached by this Friday. Currently it is unclear whether the Republicans will start fighting on the debt ceiling, while party's representative John A. Boehner pointed out last month American should not even get close to default.
What is more important is the fact that amid the risk of the government default Dukascopy traders were not showing willingness to buy the greenback, as American currency is bought only in 52% of all cases across the board, while on Monday the CCY index stood close to 57%.
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