The USD relative to the world is a battered currency; with CIT group filing for bankruptcy (WSJ.com) the outlook looks grim for this currency. The markets could possibly take a hit in the 1^st week of November because a lot of economic news is on the horizons such as Bank Rate decisions and Non-Farm Payrolls on Friday Nov, 6 (forexfactory.com).

The list of news starts with these numbers: ISM Manufacturing PMI on Monday along with pending home sales, these numbers alone can set the tone for the market for the week if they are either bad or good (forexfactory.com). Judging from CIT’s bankruptcy I would assume these numbers to be mediocre to bad at the least, but there can always be surprise factors just like last week’s GDP expansion. The ADP Non-farm employment change can be a premonition to Friday’s actual NFP report. The forecast for that number is -173k versus -263k the previous month (WSJ.com). These NFP numbers can be interpreted in several ways; either people are finding work or just have gotten off unemployment. An increase in NFP shows that people are getting employed therefore can possibly contribute to economic growth with their work output (forexfactory.com).

The Fed maintains its Fed Funds target rate < 0.25% the same rate target since December 16, 2008 (fxstreet.com). I believe the dollar will depreciate more across the board in order for the US economy and the equity markets to recover. This being the dollar is an anti commodity currency, thus when the dollar appreciates commodity prices fall on gold, oil etc. This causes drops in equity markets as well because commodities are currently somewhat correlated to the economic recovery. Oil rising causes the SP500 and DJIA to advance and vice versa. A stronger dollar is currently not beneficial for the US economy and I believe Bernanke is doing the best job he can to stimulate the economy with their policy of quantitative easing.

References:

1. "Currencies." Wall Street Journal. 1 Nov 2009. Wall Street Journal, Web. 1 Nov 2009. <http://online.wsj.com/public/page/news-currency-currencies-trading.html>.

2. "World Interest Rates Table." www.fxstreet.com. 01 Nov 2009. FXStreet, Web. 1 Nov 2009. <http://www.fxstreet.com/fundamental/interest-rates-table/>.

3. Hyerczyk, James. "U.S. Dollar posted a strong gain after bearish economic reports this morning." www.fxstreet.com. 31 Oct 2009. FXStreet.com, Web. 1 Nov 2009. <http://www.fxstreet.com/technical/analysis-reports/the-forex-technical-report/2009-10-31.html>.

4. "Calendar @ Forexfactory." www.forexfactory.com. 01 Nov 2009. Forex Factory, Web. 1 Nov 2009. <http://www.forexfactory.com/calendar.php>.