France and Austria will lose their AAA credit ratings from S&P today, confirmed by government officials, though the actual news has not dropped just yet. The news has hit the EUR and risk assets pretty hard today and the implications will be felt more intensely following the weekend. The EUR/USD fell to a 17-month low.

From Financial Times: An Austrian official confirmed that S&P was downgrading Austria to double A plus with a negative outlook, citing the country's economic and financial ties to Italy and Hungary. Italy was to be cut by two notches, a person familiar with the matter said, while signs mounted that other nations outside the top tier, including Spain and Portugal, could also be downgraded.

The rumors of a France downgrade have been floating around for weeks if not months, and it may allow markets to get on with their business with that particular Damascus Sword hanging overhead. Still, it will be troublesome to see such a move, with 6 countries downgraded at once.

The one positive is that Germany will keep its AAA rating.

From Bloomberg: A confirmation of Germany's AAA rating may lessen the blow of a French downgrade as governments struggle to convince investors that they can cut deficits and end the turmoil that has roiled markets for two years. Still, France and Austria losing their top ranking may erode the firepower of the euro- region's bailout fund that's needed to tap markets to finance aid for Greece, Ireland and Portugal.

It will be interesting to see what the strategy will be regarding the EFSF, if France and Austria's ratings were both lowered, it would limit the volume of AAA rated EFSF paper that could be issued, or the EFSF could begin to issue non triple-A rated paper, said David Schnautz, a fixed-income strategist at Commerzbank AG in London.

The next problem will be resolving the Greek write-downs, with negotiations breaking down.

Again, from FT: The expected downgrades came in lockstep with new problems for the eurozone on other fronts - debt-restructuring talks between Greece and holders of its debt broke down over how large bondholders' losses should be, raising the spectre of a Greek default in March.

- Nick Nasad is the Chief Market Analyst at FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.