- The Federal Reserve slashed the fed funds rate by 50bps to 1.00%
- US Q3 GDP fell by the most since Q3 2001 on slowing exports, plunge in consumption
- JP Morgan Chase announced they will delay foreclosure proceedings, modify $110 billion in mortgages

The US dollar ultimately ended last week lower across the majors, falling nearly 1 percent against the euro but plummeting over 5 percent versus the Canadian dollar and more than 7 percent against the Australian dollar. Indeed, the commodity dollars held strong as oil bounced from Monday’s lows and the Reuters/Jefferies CRB Index managed to close the week above key support. Likewise, other traditionally risky assets like stock markets gained as well, suggested that a pick up in risk appetite help to drain demand for safe-havens like the greenback.

When it comes to the US dollar, one thing is clear: risk trends are dominating price action, not fundamentals. Indeed, the economic picture of the US is not a pretty one, and upcoming releases are likely to highlight that this week. On Monday, the Institute for Supply Management (ISM) is expected to report that their index of conditions in the manufacturing sector held below 50 - signaling contraction - for the third consecutive month in October to a seven-year low of 41.5. Likewise, the ISM’s index of conditions in US non-manufacturing sector - which accounts for approximately 70 percent of total economic activity in the country and includes retail, services, and finance – is anticipated to fall to 48.0 from 50.2. Indeed, consumer confidence remains exceptionally weak, as the Conference Board’s measure fell to a record low of 38 during the same month.

The marquee release for the US, though, will be non-farm payrolls (NFPs). While NFPs have not consistently produced a strong reaction from the US dollar lately, it is one of the most watched and timely US economic indicators, making it worth keeping an eye on. NFPs are forecasted to contract by 180K, marking the 10th consecutive negative reading, while the unemployment rate is anticipated to jump to a more than 5-year high of 6.3 percent from 6.1 percent. Such a negative result will only add to the downside risks for consumption going forward, which remains the lifeblood of the US economy.

If fundamentals aren’t driving the US dollar, how are you supposed to trade the currency? The key will be to watch how these releases impact risk sentiment, because these days, something that leads the stock markets to fall tends to benefit the US dollar, and vice versa. The other thing to keep in mind is how other economies and currencies are doing relative to the greenback. With the Bank of England and European Central Bank both forecasted to cut rates on Thursday, and likely to signal that there are more reductions to come, the news may ultimately be bullish for the US dollar.

Jamie Saettele is a Technical Currency Analyst for FXCM.