I know investors already have a long list of things to worry about: the euro crisis, slowing economies around the world and in the U.S., and the machinations of the Federal Reserve and the European Central Bank, to name just three.

But if you're not watching the ins and outs of global currencies, you need to add this to your list.

Understanding which currencies have been rising and which have been falling will help you understand the recent performance in not just stocks and bonds but also commodities and gold.

And that currency performance will also help you pinpoint some markets that will deserve a bit of your cash not too far down the road.

The recent big move in the U.S. dollar versus almost all other global currencies -- created by the current flight to safety -- has overwhelmed longer-term fundamental trends. The rise of the dollar in the short term, I'd argue, has created some interesting bargains in the medium and longer terms, not just for currency traders but also for investors in global stocks.

An overvalued dollar -- on its fundamentals -- will, when the dust clears sufficiently, enable you to buy nondollar assets at bargain prices.

The dollar on a roll

You've undoubtedly been following the U.S. dollar, especially against the euro. That exchange rate has been a major driver of prices in the commodities market -- as the dollar has climbed, the prices of oil and other commodities in dollars has fallen, because it takes fewer of these more-valuable dollars to buy a barrel of oil. And it has been a big part of the reason for the drop in gold prices and in the value of financial assets such as European stocks priced in euros.

Image: Jim Jubak

Jim Jubak

Even after a slight gain against the dollar on Friday, after the disappointing U.S. jobs report, the euro was down 7.6% against the dollar since the 2012 high (Feb. 28) and down 15.3% since June 7, 2011.

And that's had the effect of depressing stocks priced in euros. Certainly, a European luxury-goods stock such as LVMH Louis Vuitton Moët Hennessey (LVMUY) has its shares of worries that a European recession and slowing growth in China will reduce sales. But the dollar certainly hasn't helped. During the period from June 7, 2011, when the euro fell 15.3% against the dollar, shares of Louis Vuitton fell 16.45%.

Of course, the dollar has been climbing against more than just the euro. Many of these currencies have held up relatively well against the dollar until recently.

The Australian dollar, for example, is down 11.5% from its 2012 high (on March 1) through June 1. Its total decline against the dollar over the last year isn't a whole lot steeper, at 13.6% from its 2011 high on July 28. The big damage has come in the past month or so, with the Australian dollar falling 7% from April 30 through June 1.

Most global currencies show similar patterns of decline against the dollar, with the decline accelerating in the past few months. For example, the Brazilian real is down 24.5% against the dollar as of June 1, from its July 25, 2011, high. But more than half of that is from the 2012 high on Feb. 28. From that date through June 1, the real is off 16.9%.

The Canadian dollar, which climbed regularly from Dec. 19, 2011, to April 27, 2012 (a gain of 5.9%), has given it all back (and a bit more), with a 6.03% drop that has taken the loonie back to the levels it last saw in November.

Even the Chinese yuan has dropped against the dollar -- or to be exact, the People's Bank has let China's currency drop against the dollar. The yuan declined 0.9% against the U.S. dollar in May. Part of that is a result of a decision by the central bank to let the yuan depreciate against the dollar inside its official trading range to give Chinese exports an edge in world markets -- because they would cost less to overseas customers. (The big problem here is with the euro. Since the yuan is effectively linked to the dollar, the rise of the dollar against the euro has made Chinese exports more expensive in Europe, China's biggest export market. Letting the yuan depreciate against the dollar is a way to slow the yuan's gains against the euro.)

The yuan has also been under some pressure because the pace at which wealthy Chinese are moving money out of China has increased since the recent purge of Bo Xilai.

It's not all about the euro

Not all of the drop against the dollar has been a result of the eurozone debt crisis, which has led currency traders and portfolio managers to seek the safety of the U.S. dollar and dollar-denominated assets such as Treasurys.

Some of the drop in these currencies has been the result of negative developments in individual domestic economies. For example, the drop in the Canadian loonie comes as Canada's own economy (so closely linked to that of the United States) has slowed, increasing the odds of an interest-rate cut there by the end of this year. (By reducing what investors get paid for holding assets denominated in Canadian dollars, an interest-rate cut decreases the demand for assets denominated in Canadian dollars and thus reduces demand for Canadian dollars themselves.)

Similarly, the Brazilian economy has had difficulty gaining traction since the last round of interest-rates hikes from the Banco Central do Brasil to slow the economy and reduce inflation. On May 30, the central bank cut interest rates -- by 0.5 percentage point -- to a historic low of 8.5%. The bank has now reduced rates by a full 4 percentage points since it began cutting rates in August 2011. The Brazilian real has, by and large, followed the bank's benchmark interest rate downward.

In Australia, the central bank is expected to cut interest rates from the current 3.75% to 2.75% by the end of 2012 in order to stimulate an economy that is slowing in lockstep with softening Chinese demand for industrial commodities.

In Mexico, where the peso has declined by 12.4% against the dollar since March 13, the currency has moved down recently with data showing slowing growth in the United States and polls on the July presidential election suggesting that the left-wing Party of the Democratic Revolution is closing the gap with the centrist (but once itself left-wing) Institutional Revolutionary Party, with the right-wing National Action Party falling to a weak third place.

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