Credit rating agency Fitch Ratings downgraded the U.S. government's rating from AAA to AA+. The article stated that the sovereign credit rating of the U.S. was lowered by one level, from AAA to AA+.

This announcement came two months after the credit rating agency warned that the fiscal and financial ratings of the U.S. government were at risk due to lawmakers putting the country at risk of default while battling over raising the national debt limit.

Despite concerns that the ballooning budget deficit could lead to potential market disruptions, economic impacts, and the upcoming presidential elections scheduled for next year, the downgrade of Fitch Ratings on the U.S. government debt sparked criticism from both Washington and Wall Street.

According to Fitch's statement, the financial position in the United States is likely to deteriorate over the next three years, considering economic shocks, new spending initiatives, tax cuts, and recurring political deadlocks.

To cover the growing budget deficit, the Treasury Department decided to increase its borrowings. Just hours before this decision, Treasury Secretary Janet Yellen called the rating downgrade arbitrary and outdated, citing recent signs of economic resilience and the eventual lifting of the debt limit.

This news caused significant turmoil in the financial markets, resulting in a decline in precious metals and American stocks, thereby providing strong support to the dollar along with the rise in yields on U.S. Treasury bonds.

The dollar gained 0.35% and is currently trading at 102.74.