“Further delay in reaching agreement on a credible medium-term deficit reduction plan would imply public debt reaching levels that is inconsistent with the U.S. retaining its ‘AAA’ status, despite its exceptional credit strengths,” Fitch said in a report.
As long time readers know, the US AAA credit rating is a bit of a farce.
The rating agencies seem to respond to the burgeoning debt and pending insolvency with glacial speed.
When they say time is "running out" it means that time ran out some time ago and they just have not downgraded the rating yet.
Despite such rhetoric, the dollar usually rises when the economy starts to sink.
Other indicators are showing that a big move in the economy and stock market is coming.
Look at the following charts of these currencies:
First, the Australian dollar.
Note the breakdown of the thin purple line and negative MACD cross - the pattern looks like it could fall well below 90 cents!
Now let's look at the Canadian dollar.
The Thin Green Line looks like it was breached this past week.
All the indicators (MACD, RSI, EMAs) are bearishly aligned.
This pattern appears to measure below 88 cents.
And the British Pound looks like this.
Same comments with the Pound except that it broke down three weeks ago.
The pattern potentially measures to - get this - $1.25.
This could mean parity with the Euro or worse potentially for the Pound!
Therefore, we can expect to see the US dollar rise sharply over the next few months while many other currencies sink.
This usually means bond yields will fall, stocks will drop, and precious metals will rise.
We will probably hear the phrase currency war repeatedly used in the news as the hot money flocks away from riskier commodity based currencies to perceived safe havens like the US dollar and gold.
Stay tuned. We could be in for a nail biting spring session in the stock and bond markets.