Well, so much for having small hopes that the US Congress would come up with a viable solution to the debt issues of the US. As predicted, some half worked package was thrown together at the last minute that is a junk solution and it was passed out of desperation.
According to the reaction of the markets and trading partners of the US. It looks like this trust has become an issue. The reaction started with the dow sinking several hundred points a day for a few days and then plunging more than 500 points and it ended with a downgrade of US Debt by S&P.
None of this is to say that the S&P deserves real credibility since they fumbled up the ratings of mortgage junk a few years ago, but in this case their decision makes sense. US Lawmakers have shown everyone what they are made of, and they care more about being re-elected than doing the right and most logical thing.
What does this mean for the US Dollar? Over the long term I would expect a fall, but over the short term, we may get a serious spike as the money doesn't know where to go, the short term result remains unpredictable. If you find yourself sitting in any risk assets, it might be smart to pull them for the time being until this upset makes it's way through the markets. It's likely that there will be lots of arguing in the upcoming week and “surprises revealed” so it's time for some real caution here. The time to invest will be coming soon.