Sentiment towards the dollar and euro truly turns on a dime.
Now we’re being hit with a report that Standard & Poor’s thinks the U.S. could lose its AAA-rating (old warning, new issue) and that the euro could threaten its place as the world’s reserve currency:
In a report published yesterday, the ratings agency said that there were risks that “external creditors could reduce their US dollar holdings, especially if they conclude that eurozone members are adopting stronger macroeconomic policies”.
This could undermine the dollar’s status as the global reserve currency, it said, an outcome which would “weigh on the triple A rating on the US.”
“In our opinion, fiscal outturns, inflation figures, trade volumes, foreign exchange volatility and the current account will be the leading indicators if the dollar’s role were to diminish,” S&P said.
We were just hit with mid-2009 deja-vu.
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