The Central Bank will keep rates unchanged, but the widening yield spreads between mortgage-backed securities (MBS) and federal agency debt against Treasuries may be an essential factor in determining the Fed’s stance on the direction of interest rates, reports Julie Haviv for Reuters. The Fed will buy $1.25 trillion allotted for its MBS program by the end of the first quarter of 2010. (ETFs to shelter against a weak dollar).

Purchase programs have inflated some securities to the point that investors are beginning to turn to the risk/reward of alternative spread products like corporate bonds. For instance, the yield spread on the 30-year Fannie Mae 4.5% current coupon stood at 1.47% over the 5- and 10-year Treasury blend, says Arthur Frank, director and head of MBS research at Deutsche Bank Securities.

The Fed’s decision ultimately could keep the dollar weak for the time being. To capitalize on continued weakness in our currency, consider some of the following ETFs:

• PowerShares DB U.S. Dollar Bearish (NYSEArca: UDN). UDN is up 7.2% year-to-date. This ETF seeks to reflect the performance of the short side of U.S. dollar – basically, the dollar goes down the fund goes up. (More on UDN and a weaker dollar).

• CurrencyShares Euro Trust (NYSEArca: FXE). FXE is up 5.4% year-to-date. A straight forex play on the appreciating euro. As the dollar depreciates against the euro, the euro gains in strength. FXE tries to reflect those gains. (More on FXE and the euro)

• iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM). EEM is up 54.1 % year-to-date. By holding non-dollar-denominated assets, such as emerging market equities, investors  can hedge against weakness. Emerging market investments get the benefit of the “dollar kicker” since assets denominated in foreign currencies are eventually converted back to weaker U.S. dollars. (More on EEM and emerging markets).

• iShares S&P GSCI Commodity-Indexed Trust (NYSEArca: GSG). GSG is up 12.5% for the year. This fund, like other commodity funds, can be a weak dollar hedge. GSG owns futures for 24 different commodities. (More on GSG and commodities).

• SPDR Gold Shares (NYSEArca: GLD). GLD is up 23.1% year-to-date. Gold is another weak dollar hedge because it’s considered a store of value. The current high supply of the dollar in the economy can result in high inflation and many investors have turned to gold as a way to protect against inflation. (More on GLD and gold).

For full disclosure, Tom Lydon’s clients own shares of EEM and GLD.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

Max Chen contributed to this article.

A weak U.S. dollar helps U.S. manufacturers, U.S. exporters and U.S. multinationals, writes Gary Gordon for ETF Expert. But a weak dollar means foreign exporters and foreign manufacturers are hurting as they try to sell to the U.S. market. (What’s so great about a weak dollar?)

For example, the strong euro is bad for business in the Eurozone. In August, exports dropped 6% from the previous month because of an appreciating euro. (More on the eurozone).

• CurrencyShares Euro Trust (NYSEArca: FXE): up 5.1% year-to-date

Japan is another country watching its currency appreciate. The Japanese yen is likely to stay stable since the island nation is heavily export dependent.

• CurrencyShares Japanese Yen Trust (NYSEArca: FXY): up 0.2% year-to-date

Both FXE and FXY are in an uptrend, tracking above their 50-day and 200-day moving averages.

As it stands, Europe and Japan don’t have much room to further decrease the value of their currencies through monetary policies since interest rates are already so low. Still, the U.S. dollar can’t go on depreciating forever.

For more information on world currencies, visit our currency category.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

Max Chen contributed to this article.

Governments of the European Union will need to reduce deficits and public debts that were incurred during the revitalization process of their economies, or the European Central Bank will raise interest rates, hampering the region’s economic recovery, reports Paul Taylor for The New York Times.

The Bruegel research group proposed that the E.U. should recapitalize and restructure banks, cut budget deficits and tighten monetary policy – in that order. (Four reasons Europe could make a comeback).

Meanwhile, the recovery could be uneven and various countries tackle their problems in their own way:

• E.U.’s Monetary Affairs Commissioner Joaquin Almunia stated that Germany’s unbalanced economic strategy failed to raise domestic demand and caused problems for the whole region.
• France and other countries were unable to consolidate their budgets and went into the crisis with high deficits.
• The current situation shows individual countries in the eurozone striving for their own well-being, and in Germany’s case, at the expense of others. (Watch Tom talk about Europe on CNBC).

Instead of picking individual countries if recovery will be uneven, a better way to invest in Europe may be through an ETF covering the region – this helps mitigate your risk.

• iShares S&P Europe 350 Index Fund (NYSEArca: IEV): up 32.9% year-to-date

• Vanguard European Stock (NYSEArca: VGK): up 36.2% year-to-date

• BLDRs Europe 100 ADR Index Fund (NYSEArca: ADRU): up 33.9% year-to-date

Countries that use the euro sent their finance ministers to meet as the euro appreciated against the dollar, reducing gains that would have aided the region’s economic recovery, writes Aoife White for The Associated Press. The eurozone’s foreign exports dropped 23% in August year-over-year, the quickest drop this year.

The eurozone is projected to pull out of the recession in the third quarter. Rising unemployment is still a problem for the region. (Our definitive guide to currency ETF investing).

For more information on Europe, visit our Europe category.

• CurrencyShares Euro Trust (NYSEArca: FXE): up 7.7% year-to-date

Read the disclaimer, Tom Lydon is a board member of Rydex Funds.

Max Chen contributed to this article.

All eyes are on the troubled financial sector this earnings season as investors look for signs that the system is on the mend:

• Wells Fargo (NYSE: WFC) reported that its profit jumped 61%, but its loan losses also jumped to more than $5 billion. Wells Fargo is simply getting in line with other big banks, which have also reported big losses from loans gone bad, reports the Associated Press.
• Morgan Stanley (NYSE: MS) beat analysts’ expectations by reporting consolidated net revenues of $8.7 billion. The profit ends a three-quarter losing streak, and it can be attributed to Morgan Stanley’s new conservative stance in the wake of the financial collapse, Reuters reports.

Financial Select Sector SPDR (NYSEArca: XLF) is up about 1% this morning; Wells Fargo is 9.3%; Morgan Stanley is 2.8%

The euro has topped $1.50 against the dollar, a key threshold that raises concerns in Europe about what impact the strong currency will have on its recovering economy. European policy makers have been trying to make the euro weaker, but the markets aren’t paying attention, Neil Shah for The Wall Street Journal reports. CurrencyShares Euro Trust (NYSEArca: FXE) is up about 0.5% this morning.

A drop in gasoline inventories and a weakening dollar also contributed to the price of oil jumping close to $80 a barrel this morning. While the data was close to what analysts expected, it also confirmed that refiners have cut back enough that it’s depleted inventories, reports Brian Baskin for The Wall Street Journal. Last week, oil refiners pushed rates up to 81.1% of capacity, slightly higher than the week before. United States Gasoline (NYSEArca: UGA) is up nearly 2% this morning.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

Most recently, policy makers have boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, report Ye Xie and Anchalee Worrachate of Bloomberg.  The currencies of choice are the euro and yen, which account for nearly 63% of new cash. Read more about using currency in your portfolio here.

The world is flush with dollars as the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors.  This, in turn, is making the dollar less of a diversifier for investors. To add to the currency’s woes, foreign corporations and economies are starting to feel the effects of a weak dollar, as well.

From an investor’s perspective, one can play the PowerShares DB Dollar Bearish (NYSE:UDN) which is up 7.6% year-to-date.

For a more optimistic approach, one can play the Euro through the Rydex CurrencyShares Euro Trust (FXE) which is up 6% year-to-date.

As for the yen, it can be played through Rydex CurrencyShares Japanese Yen Trust (FXY) which is up 0.4% year-to-date.

By holding non-dollar-denominated assets, such as emerging market equities, investors  can hedge against weakness. iShares MSCI Emerging Markets (NYSEArca: EEM) is up 60.9% year-to-date. Read about what emerging markets can do for your portfolio here.

A weak dollar can also be hedged with commodity ETFs, including United States Oil (NYSEArca: USO) and iShares COMEX Gold Trust (NYSEArca: IAU). Dollar-denominated assets tend to become cheaper for overseas buyers, which often leads to a spike in prices.

For more stories on currency ETFs, visit our currency ETF category.

Read the disclaimer, Tom Lydon is a board member of Rydex Funds.

For full disclosure, Tom Lydon’s clients own shares of EEM.

Kevin Grewal contributed to this article.

Johnson & Johnson (NYSE: JNJ), which makes Band-Aids and the Acuvue brand of contact lenses, reported better-than-expected earnings but just missed the revenue forecast, reports Linda A. Johnson for the Associated Press. Pharmaceutical sales dropped 14.1% because of increased generic competition. iShares Dow Jones U.S. Pharmaceuticals (NYSEArca: IHE) is down about 0.6% this morning. JNJ is 8%.

Gold hit an intraday price record, surging as high as $1,069.70 an ounce. Many analysts expect the price of gold to continue to rise into next year, reports Ben Rooney for CNNMoney. The weakening U.S. dollar has lent support to gold’s run-up. Have a strategy when investing in gold, and be sure to set a stop loss that you can execute when the time comes. Read how here. SPDR Gold Shares (NYSEArca: GLD) is up nearly 0.5% this morning.

The euro has jumped to its highest level against the U.S. dollar since September 2008 as investors seek out higher yields, reports Nicholas Hastings for The Wall Street Journal. The eurozone’s currency is on its way toward $1.50. CurrencyShares Euro Trust (NYSEArca: FXE) is up about 0.25% in morning trading. Read about how to incorporate currencies into your portfolio here.

Cisco (Nasdaq: CSCO), the world’s largest manufacturer of networking equipment, is buying Starent Networks Corp. for $2.9 billion. This is Cisco’s second multibillion-dollar buy in less than two weeks, reports Rochelle Garner for Bloomberg. iShares S&P North America Tech-Multimedia Networking (NYSEArca: IGN) is up about 0.2% this morning.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

For full disclosure, Tom Lydon’s clients own shares of GLD.

The Forex Market

The foreign exchange market, also known as the forex market, is the largest market in the world. In 2007, for example, it garnered $3.2 trillion worth of transactions each day. It’s the quiet giant of finance and dwarfs all other capital markets worldwide.

Unlike most other trading, such as futures, stocks or options, forex trading doesn’t happen on an exchange. It’s not controlled by any governing body, has no central exchange and there are no clearing houses involved guaranteeing trades. It’s a global network, made up of banks, corporations and individuals. The forex is also the most liquid market – there are always ready and willing buyers and sellers for the currency someone is seeking to trade.

The vast majority of currency trading is done bank-to-bank, and when each party enters into an agreement, they both take on the counterparty risk of the other. They’re not only competitors, but they’ve got to cooperate, as well.

There’s no actual buying and selling in the currency market – only trading, hence the need for cooperation.

Exchange traded funds (ETFs) have made entering this market much easier than it used to be. Prior to the launch of currency-related ETFs in 2005, the forex was a challenging market for individual investors to gain access to. Many investors might find this simplified access appealing, especially when you’re talking about a market that’s open 24 hours a day. If you’ve been eager to play this market, there are a rapidly growing number of opportunities to play the currency markets in the form of both ETFs and exchange traded notes (ETNs), which we’ll detail later.

Currency Basics

When entering the currency market, much of the focus is on the eight major currencies, which give you the best over- or under-valued opportunities. The eight major countries that make up the currency trading market are the United States, the Eurozone (Germany, France, Italy and Spain), Japan, United Kingdom, Switzerland, Australia, Canada and New Zealand.

There are many, many more currencies beyond the eight majors, such as the Brazilian real, Polish zloty and Hungarian forint.

Some of the key points to consider when you’re investing in currencies are:

• When trading currencies, yield drives return. Every currency has a yield.
• The forex allows huge leverage; often as high as 100:1 – which means that you can control $10,000 worth of assets with as little as $100 of capital. Remember, leverage works both ways, though.
• Since currency values never stay the same, the carry trade became a popular theory. Carry traders hope to earn not only the interest rate differential between the two currencies, but also look for their positions to appreciate in value. We’ll discuss this in more detail in the next section.
  
• Interest rates matter – a lot. Becoming familiar with the economics of the country in which the currency you are trading holds will help you understand when inflation is looming and when opportunity is knocking.

In currency markets, there’s always a bull somewhere. Why? The foreign exchange market is all about opposites and all about relativity. As one currency gains value, another has to be losing.

Dan McCabe, CEO at Next Investments, points out that one of the biggest advantages to investing in currencies is that it’s a great way to get non-U.S. dollar exposure.

“As an investor, I have nearly all my stuff in U.S. dollars. When I want to buy something, it’s often foreign-made. If I don’t have a hedge for the fact that the U.S. dollar may depreciate, I’m just losing my buying power on the world stage.”

For example, have a look at this five-year chart of the euro vs. the U.S. dollar. For the last three years, the euro steadily gained before falling off mid-way through 2008:

This means that as the euro gained strength, perhaps tourism in Europe suffered as Americans couldn’t afford to go over there and spend as much. But on the flip side, it likely brought tourists over here who were itching to spend and find bargains. Currency is all about relationships, and a currency being either weak or strong doesn’t necessarily mean it’s bad or good.

McCabe sees currencies as more of a buy-and-hold hedge instead of getting caught up in trading. “You’d rather just come in, buy it and put it away and look at it like a foreign money market account,” he says.

The Carry Trade

One of the most popular ways for institutional investors to play currencies is with the carry trade. Putting it simply, the carry trade involves borrowing currencies from countries with low interest rates and investing it in high interest rate countries. The strategy aims to take advantage of the wide spread in interest rates between certain currencies.

As of June 24, some interest rates for various currencies were:

• Australian Dollar, 3%
• New Zealand Dollar, 2.5%
• Euro, 1%
• U.S. Dollar, 0.25%
• Japanese Yen, 0.1%

You can track these interest rates at Daily FX.

With these interest rates in mind, an investor utilizing the carry trade would want to buy Australian dollars with the much lower-yielding Japanese yen, which is one of the most popular carry trade combinations around.

The carry trade isn’t a risk-free strategy, though. One of the biggest risks is if the exchange rate devalues by more than the average annual yield. If you’re using leverage, your losses could be even greater.

ETFs have simplified the carry trade for retail investors. The PowerShares DB G-10 Currency Harvest (DBV) tracks the interest rates of the U.S. dollar, euro, Japanese yen, Canadian dollar, Swiss franc, British pound, Australian dollar, New Zealand dollar, Norwegian krone and the Swedish krona. DBV looks at the three-month interest rates of the G10 currencies and goes long on the three with the highest rates and short on the three with the lowest. The ETF seeks to capitalize on the trend that the currencies with high interest rates generally tend to rise in value relative to currencies that have low interest rates.

Currency Risks

McCabe points out that currencies are non-correlated assets. “The risk you have oftentimes is performance vs. the underlying currency you’re purchasing in.”

As an example, assume that $1 equals 1 yen. If the dollar increases in value, you might get 1 yen for 90 cents – great if you’re traveling to Japan when this happens. However, it’s not so great if you have an asset priced in yen that you bought when dollars and yens were of equal value.

The flip side also works: if the dollar falls against various currencies, you stand to make money on assets based in those currencies if you bought them before the dollar weakened.

When searching for currencies to invest in, McCabe looks at the country behind it. Political upheaval can wreak havoc on a currency.

“I would look for a stable country with strong jurisprudence and rule of law…a country you believe is going to be stable, in case of turmoil.”

Why Use ETFs Instead?

Investing in currencies on your own, without an ETF, can be an arduous task. The currency market is one that never closes. Twenty-four hours a day, trillions and trillions of dollars in trades are taking place. You could find yourself sitting up in the middle of the night, waiting for a key signal to pounce on a trade.

That probably doesn’t sound like the average retail investor’s idea of a good time.

There are now two options for exchange traded currency investing: ETFs and exchange traded notes (ETNs).

Two key differences between currency ETFs and ETNs are:

1. Currency ETNs (like all ETNs) are backed by the full faith and credit of the issuer. If the issuer goes under, you have to get in line with all the other creditors. It’s a small risk, but it’s one to keep in mind.
2. Currency ETNs linked to a single currency are treated like debt for federal tax purposes, according to a 2007 IRS ruling. It means that any interest is taxable to investors, even though the interest is reinvested and not paid out until the ETN is sold or upon maturity of the contract. It also means that investors can’t elect capital gains treatment.

Not all exchange traded currency products are structured in the same way, either.

McCabe points out that it’s wise to be aware of what makes currency products different from one another. For example, Rydex’s CurrencyShares funds are grantor trusts – they hold the actual currency.

The interest earned on them is accrued on a daily basis and reinvested monthly. This reinvested interest is then reflected in the fund’s net asset value (NAV).

On the other hand, PowerShares‘ currency ETFs, PowerShares DB US Dollar Bullish Fund (UUP) and PowerShares DB US Dollar Bearish Fund (UDN), hold futures contracts and are registered as open-ended ETFs. Any gains from futures contracts are subject to 60/40 tax treatment, in which 60% of the gains are long-term, 40% are short-term.

In the bullish fund, the futures contracts are designed to be long on the U.S. dollar against the euro, yen, pound, canadian dollar, Swedish krona and Swiss franc. The bearish fund is designed to be short on the U.S. dollar against those currencies.

WisdomTree’s currency income ETFs invest in either non-U.S. moey market securities, or in a combination of money market instruments designed to provide exposure to non-U.S. money market securities or rates. They are not money market funds. They seek to give investors current income reflective of foreign money market rates available to U.S. investors, as well as exposure to changes in the value of a specific currency relative to the U.S. dollar.

Market Vectors‘ currency ETNs are senior, unsecured debt securities that give exposure to the exchange rate between U.S. dollars and foreign currencies. The underlying indexes are also affected by movements in interest rates in the country of the underlying currency and that of the United States’.

Market Vectors and ProShares also have some double long and double short ETNs for investors looking to enhance their exposure. They aim to double the daily performance of a specific currency. Know the risks of short and leveraged funds before you invest, however. They aren’t for everyone.

Barclays’ iPath currency ETNs measure the relative values of two currencies. In the EUR/USD fund, for example, when the euro rises against the U.S. dollar, the fund increases, and vice versa. The provider also has a currency carry ETN, iPath Optimized Currency Carry (ICI), that seeks to capture the returns potentially available from a carry trade. The pool of currencies the index may apply its strategies are known as the “G10″ currencies, which includes the U.S. dollar, euro, Japanese yen, Canadian dollar and Swiss franc.

How to Choose

At this point, there are enough ETNs and ETFs targeting currencies that investors have a whole range of choices when it comes to figuring out how they want to play them. When choosing currency ETFs, consider the differences between the available funds, how they access currencies and their tax treatment. In short, know what you own.

Perhaps one of the easiest ways is via a broad basket of currencies, which help spread out the risk and lessen the blows a volatile stock market can deliver. Some examples:

• Barclays Global Emerging Market Strategy [GEMS] Asia 8 Index ETN (AYT)
• Barclay’s iPath Optimized Currency Carry Exchange Traded Note (ICI)
• PowerShares DB G10 Currency Harvest Fund (DBV)
• WisdomTree Dreyfus Emerging Currency Fund (CEW)

There are a number of single-currency funds available, as well, along with a number of others that are in registration:

• PowerShares DB US Dollar Bullish Fund (UUP)
• PowerShares DB US Dollar Bearish Fund (UDN)
• CurrencyShares Australian Dollar Trust (FXA)
• WisdomTree Dreyfus Brazilian Real Fund ETF (BZF)
• CurrencyShares British Pound Sterling Trust (FXB)
• iPath GBP/USD Exchange Rate ETN (GBB)
• CurrencyShares Canadian Dollar Trust (FXC)
• Market Vectors – Chinese Renminbi/USD ETN (CNY)
• WisdomTree Dreyfus Chinese Yuan Fund ETF (CYB)
• CurrencyShares Euro Trust (FXE)
• iPath EUR/USD Exchange Rate ETN (ERO)
• WisdomTree Dreyfus Euro Fund ETF (EU)
• Market Vectors – Indian Rupee/USD ETN (INR)
• WisdomTree Dreyfus Indian Rupee Fund (ICN)
• CurrencyShares Japanese Yen Trust (FXY)
• iPath JPY/USD Exchange Rate ETN (JYN)
• WisdomTree Dreyfus Japanese Yen Fund ETF (JYF)
  
• CurrencyShares Mexican Peso Trust (FXM)
• CurrencyShares Russian Ruble Trust (XRU)
• CurrencyShares Swedish Krona Trust (FXS)
• CurrencyShares Swiss Franc Trust (FXF)
  

There are also leveraged funds, which enable investors to maximize the movements of a particular currency. The following funds all double exposure by 200%:

• ProShares Ultra Yen ETF (YCL)
• ProShares UltraShort Yen ETF (YCS)
• ProShares Ultra Euro ETF (ULE)
• ProShares UltraShort Euro ETF (EUO)
• Market Vectors Double Long Euro ETN (URR)
• Market Vectors Double Short Euro ETN (DRR)

In registration include CurrencyShares for Hong Kong, Singapore and South Africa, as well as WisdomTree funds for the Czech koruna, Chilean peso, Israeli Shekel, the Russian ruble and many more.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

For more stories on currencies, visit our currency ETF category. For more special reports, view our special report page.

After enormous government spending and  constant money printing, most Americans fear that inflation is looming.

Wes Moss for Daily News has some ways to  help hedge it:

1. Oil and Commodities. As the dollar weakens, owning oil related stocks and ETFs/exchange traded notes (ETNs) will be one of the most direct ways to hedge against this. Also, if we do see inflation, chances are that we will be experiencing some economic growth here in the United States. United States Oil (USO), up 19.1% year-to-date.

2. Non-U.S. Currencies. If the U.S. dollar does lose value relative to other currencies, it will be beneficial to have a portion of your investments in those foreign currencies. This can be accomplished by owning the actual currency itself in a brokerage account, or investing in an ETF that tracks a foreign currency. There are an increasing number of these currencies available to investors, including CurrencyShares Euro Trust (FXE) and WisdomTree Dreyfus Chinese Yuan (CYB), up 0.4% and up 2.3% year-to-date, respectively.

3. TIPs/ Bonds. TIPS, or U.S. Treasury Inflation-Protected Securities, are aptly named, as they are designed specifically to pay you a steady yield adjusted to the U.S. Consumer Price Index. iShares Barclays TIPS Bond (TIP), up 2.5% year-to-date.

4. Futures. There are a number of ETFs that trade futures available today – it’s a much simpler route to take for the average investor. PowerShares DB Agriculture (DBA) is just one such ETF that holds futures in corn, wheat, sugar and soybeans. It’s up 4.4% year-to-date. You can find more ETFs that hold futures here.

5. Non-U.S. Stocks. Remember this works both ways: If inflation does not turn out to be a problem here in the United States and the U.S. dollar actually strengthens versus other currencies, your foreign stock investments will suffer. There are dozens of international ETFs that hold non-U.S. stocks – visit the provider’s page to find out the holdings and decide whether they’re right for you.

For more stories on commodities, visit our commodity ETF category.

For full disclosure, Tom Lydon’s clients own shares of TIP.

It is likely that the United Kingdom’s growth may come to a crawl in the coming couple of years as a result of large debt and high taxes, writes Stephen Womack for Mail Online. Investors are becoming increasingly worried about a long-term decline. That’s why at a recent trade meeting, investors and savers wanted to know how to structure their savings for a changing world.

The International Monetary Fund projects Britain’s recession will continue into 2010, longer than any other developed nation. It is also estimated that the government borrowings will increase to 11% of GDP by 2010, or two times the average of G20 nations.

The sterling pound is down around 25 cents against the dollar and 12 cents against the euro. The long-term aspects don’t look all that appealing either with exports down and the country’s North Sea oil drying up.

Since the structural economic problems in western countries won’t be easily fixed, many investors are shifting their attention to the East, or newer economies. Some investors are also looking into countries with high interest rates, but it should be noted that there are risks in exchange rates.

At the trade meeting, one investor noted that there has always been a natural rise and fall in how nations perform in the long term, and that we’re currently in another big shift with the United States and United Kingdom seeing some decline.

This highlights the versatility of ETFs – you can use them to make plays on different world events, shifting climates and changing trends. Just because one area is in a funk doesn’t mean that every area is. Use ETFs to spot new opportunities and have an entry and exit strategy.

• CurrencyShares British Pound Sterling Tr (FXB): up 0.6% year-to-date

• iShares MSCI United Kingdom Index (EWU): down 9% year-to-date

• CurrencyShares Euro Trust (FXE): down 7.2% year-to-date
  

• Barclays GEMS Asia-8 ETN (AYT): down 0.1% year-to-date

Max Chen contributed to this article.

Nearly a decade ago – Jan. 1, 1999 - Europe launched their shared currency, only to watch it fall, and then recover to solid ground. Economists are giving the euro a nod, as it has fulfilled the promise to lower borrowing costs, ease trade and tourism, boost growth and strengthen the European community in general, reports Matt Moore and George Frey for the Associated Press.

The euro has helped Europe to stave off inflationary pressures, created the zone of stability and security for those nations joined, and given strength to the overseas currency against the U.S. dollar. At one time, it was as high as $1.6038 US.

Many countries that decided to stay out of the European Union, such as Iceland and the United Kingdom, are asking for financial bailouts at this point in time. The sterling hit an all-time low against the euro as the United Kingdom is facing more rate cuts before stabilizing.

Meanwhile, the British pound has hit a record low against the euro today, on news that more interest rate cuts in the United Kingdom could be coming, reports Naomi Tajitsu for Reuters.

• CurrencyShares Euro Trust (FXE): down 0.5% year-to-date

• CurrencyShares British Pound Sterling Trust (FXB): down 23.4% year-to-date

• UltraShort Euro ProShares (EUO): down 16% since inception

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.