An Ugly Contest: the USD and the Yen

The U.S. dollar and the Japanese yen are traditionally seen as two of the most steadfast currencies in the world. However, in recent months, both currencies have been battered by poor news.

On Tuesday, Moody's warned that it may lower Japan's AA government debt rating, according to Bloomberg. While on Wednesday, ADP payroll numbers in the U.S. came out far lower than anticipated. Both currencies depreciated on their relevant news.

But which currency is worse off?

The strength of a country's currency is often correlated with the strength of that country's economy.

Japan's economy has been pressured by natural disasters. The tsunami in March and the subsequent nuclear issues have threatened much of the island nation's growth. In Moody's report, they also cite poor demographic trends. Japan has an alarmingly low birth rate and one of the highest life expectancies in the world.

The U.S., on the other hand, is facing its own set of challenges. ADP's disappointing payroll numbers may highlight a faltering economic "recovery". Additionally, the failure of congress to raise the government's debt ceiling may imperil the nation's finances going forward.

Traders believing that the Japanese yen is a safer play than the U.S. dollar might consider CurrencyShares Japanese Yen Trust (NYSE: FXY). FXY is up on the trading session, and may do well if the yen appreciates.

Traders who favor the dollar over the yen may consider PowerShares DB US Dollar Bullish Index (NYSE: UUP). UUP may rally if the dollar rises against other currencies.

And those traders who are disgusted with both may wish to take a position in gold or the euro. SPDR Gold Trust (NYSE: GLD) and WisdomTree Dreyfus Euro ETF (NYSE: EU) offer traders those options.