One consequence from the euro's woes? You guessed it: increased bond deals in currencies other than the euro.

The Canadian dollar and the Swiss franc are tops on borrowers' lists, Bloomberg News reported Tuesday, as investors flee the euro amid concern about European government debt.

The euro strengthened about 1.2 cents versus the dollar to $1.2328 on Tuesday at mid-day, however the currency is still down about 14% versus the greenback so far this year.

Canadian stocks are set to give American investors a twofer. As stocks go up, Gordon Pape, one of Canada's leading experts on mutual funds and the editor of The Canada Report, says that Americans get stock appreciation and a currency bonus – making investing in Canadian stocks more profitable than U.S. stocks.
And now, says Pape, is an especially good time to invest since stocks and the Canadian dollar have recently taken a breather.

We caught up with Gordon Pape to talk to him about earning market profits plus a currency bonus.

iShares Barclays Capital Long Term Tr ETF (NYSE: TIP) closed at $102.35. TIP April call option implied volatility is at 10, puts are at 8; below its 6-month average of 13, according to Track Data, suggesting decreasing price risk.

PowerShares DB US Dollar Index Down (NYSE: UDN) is a rules-based index composed solely of short USDX® futures contracts. The USDX® futures contract is designed to replicate the performance of being short the U.S. Dollar against the following currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. UDN closed at $25.52. UDN May option implied volatility of 20 is below its 26-week average of 25, according to Track Data, suggesting decreasing price movement.

PowerShares DB US Dollar Index Up (NYSE: UUP) is a rules-based index composed solely of long USDX® futures contracts. The USDX® futures contract is designed to replicate the performance of being long the U.S. Dollar against the following currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. UUP closed at $25.31. UUP May call option implied volatility is at 17, puts are at 21; below its 26-week average of 22, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

The dollar fell broadly Wednesday against major traded currencies, plunging about 2 yen versus the Japanese currency to 109.84 yen. The reason for the dollar's weakness today was that rise in oil prices and soft U.S. manufacturing data led currency traders to conclude that the U.S. Federal Reserve will have to continue to lower short-term interest rates to jump-start a sluggish U.S economy.

The dollar also deteriorated 1.50 cents vs. the euro to $1.4734 in mid-day Wednesday trading.

Rough start to 2008

Currency trader Andrew Resnick, formerly of Next Capital, told BloggingStocks Wednesday the dollar's fall took some traders by surprise.

"It doesn't take much to upset the apple cart regarding the dollar, these days," Resnick said. "A lot of traders, myself included, were stopped-out this morning with dollar-long positions, which is not the way you want to begin the trading new year." Resnick added that he was stopped-out, or went flat after a losing trade Wednesday on dollar-long day trades of euro / U.S. dollar and U.S. dollar / Japanese yen.

The dollar must be feeling a little like the late stand-up comedian Rodney Dangerfield, because recently, the dollar "just isn't getting any respect."

The dollar fell to a record low against the euro Tuesday morning, moving to $1.4556 before trading around $1.4545 on talk that the U.S. Federal Reserve is likely to lower interest rates further in an effort to stimulate the U.S. economy and counteract the economic drag effect of subprime mortgage losses. If the Fed cuts rates at its next meeting in December, it would be the third rate cut in four months.

Against the British pound, the dollar moved to $2.0897, a 26-year low, before retreating to trade around $2.0875 in Tuesday mid-morning trading. The dollar also fell to 92.59 cents against the Canadian dollar, but traded slightly higher against Japan's yen, rising to 114.75 yen from 114.55 yen earlier in the day.

In the coming weeks, bloggingstocks.com will review those stocks most likely to benefit under each scenario: a weak dollar or a strong dollar.

Commodities expert Jim Rogers is on-record with where he thinks the U.S. dollar is headed in 2008: down. That, in and of itself, is not news.

"It doesn't take a genius to figure out that it's a currency that's going to be going down for some time to come," Rogers said in an interview with the Financial Times. Rogers added that in his interpretation the U.S. Federal Reserve's and the U.S. Treasury's willingness to print money and drive down the greenback is clear.

Among other consequences of the dollar's continued fall, Roger sees higher commodity prices, a rise in U.S. inflation, and a rise in China's currency, the yuan (if the Chinese government lets it rise more). Rogers, chairman of Beeland Interests Inc., said he is also shorting shares of Citigroup (NYSE: C). [Citigroup's shares closed down $1.92 to $35.81Monday after the company said it will have to write-off $8 billion-$11 billion to account for the reduced value of subprime mortgage-related securities.]

All of which begs a good question by the investor / reader: How did the U.S. dollar drop so much in value?

Believe it or not, but "cheers erupted on the foreign exchange desk at Scotia Capital" yesterday when the loonie (that's what us Canadians call our dollar) first traded at parity with the U.S. dollar -- for the first time in 31 years. I'm sure the scene was similar in other banks across Canada. As is almost usual, though, the Americans beat us to it as they are the ones who actually did the trade, specifically Citigroup's New York currency desk. Oh, well.

The Canadian dollar hit its historic low of 61.79 cents (U.S.) on Jan. 21, 2002, but has gained more than 16% this year and almost 8% since mid-August alone. The True North is indeed strong. But is this good for Canada? For the U.S.? Canadian exporters are no doubt suffering, American ones will be doing better following the fall of the U.S. dollar. Tourism will likely improve in the U.S., but suffer in Canada. And consumers? Canadian consumers aren't happy, but I'm sure U.S. outlet malls along the Canadian border are quite happy. It used to be the other way around.