Against all odds, currency calculators could end up being fall's hottest accessory.

But, if you're shopping this weekend, don't get one made by Louis Vuitton, because European goods are more expensive than ever this season for anyone spending U.S. dollars. Indeed, European goods are getting more expensive for anyone whose money is pegged to the dollar.

Now that the

Federal Reserve

has made its move to stem the paralysis in the credit markets and subsequent economic weakness, investors are doing the cost-benefit analysis. In the short days following last Tuesday's cut, the costs of a weakened currency seem to outweigh the benefit of a resuming stock market rally. Another round of data, earnings and worldwide reaction will provide more details.

"This policy choice will entail higher rates just over the horizon to account for what will surely be an increase in core prices due to lax monetary policy today," writes Joe Brusuelas, chief economist at IDEAglobal. He adds that "the Fed had little choice but to respond to financial stress, but they did so at a long-term cost."

On the heels of fresh lows vs. the euro, the Canadian dollar and the British pound, traders will be focused on currency fluctuations next week to assess the inflationary impact of the Federal Reserve's 50-basis-point rate cut.

And, to justify the Fed's move from an economic growth standpoint, traders will be watching a hefty slug of U.S. economic data for September and August next week. The Fed claimed its unexpected cut was intended to "forestall" a serious economic downturn. So, as portfolio managers run their recession-outcome strategies, the key for the next few months is to assess how much spillover there's been from August's credit crunch into the broad economy.

"Right now the market thinks the Fed solved the problem," says Jeffrey Saut, chief investment strategist for Raymond James. "But I don't think you'll know for the next 60 to 90 days" if there really is a credit crunch beyond mortgage-backed securities and related derivatives dealers.

Traders' focus back on economic data comes on the heels of a full week for earnings reports by Wall Street brokerages, which presented a mixed bag of losses tied to seized up credit markets as well as some surprising pronouncements that the worst is over.

Goldman Sachs

(GS) - Get Report

seemed to avert any crisis whatsoever, while

Lehman Brothers

(LEH)

,

Morgan Stanley

(MS) - Get Report

and

Bear Stearns'

(BSC)

earnings were less impressive.

The data week kicks off Tuesday with the Conference Board's consumer confidence reading for September, which is expected to fall slightly after August's sharp drop. Existing- and new-home sales figures for August are due to be reported on Tuesday and Thursday, respectively. Both are expected to decline and reveal little hope for stabilization in the housing market.

Durable goods orders are out Wednesday and expected to decline by 2.5% after a 5.9% gain in July, while construction spending, scheduled for release Friday, is expected to drop 0.1% in August after a sharper 0.4% decline in July.

Thursday brings inflation data, with personal income and spending data for August. Analysts say both are expected to rise a substantial 0.4% in the month, while the core personal consumption expenditures are expected to rise a modest 0.2% in August. Most analysts believe the weakness of August's decline in jobs will not show through in consumption data for some time.

The more immediate reflections of inflation risk will be manifest in the currency markets and the price of gold.

The dollar may bounce in the near term, at least vs. the euro, says Ashraf Laidi, chief foreign exchange analyst at CMC Markets. He notes that the European Central Bank's previous commitment to raising rates is coming into question, meaning Europe may slash interest rates with the Fed. He notes that some recent European economic data also reflect a slowdown there resulting from August's credit crunch, which was not confined to U.S. banks by any stretch.

Lower rates in Europe would make the dollar more attractive again from a yield perspective, and Laidi believes weak economic data in the U.S. could once again resume the flight-to-quality trade in short-term U.S. Treasury bonds. Such panic trades, while not good for the long term, can provide a quick bounce for the dollar.

Indeed, he believes the long term is looking shaky for the greenback.

Saudi Arabia's decision not to cut interest rates along with the Federal Reserve is "very loud," says Laidi. "It's caused people to raise the question of how sustainable it is for other nations to peg their currencies to a declining dollar," he says. "There is question now as to their willingness to bear the inflation risk of the dollar."

Saudi Arabian officials said they will keep their peg, but it is customary for countries with a peg to move rates in concert with the policy of the country they're pegged to. But with oil at over $80 per barrel, Saudi inflation at 3.8% year over year and the dollar falling, keeping rates high seems reasonable.

Like the rest of the world, they're just contending with too much liquidity and slowing U.S. economic growth -- a stretched definition of global stability.

Other lowlights due next week include the latest dismal earnings reports from homebuilders

Lennar

(LEN) - Get Report

and

KBHome

(KBH) - Get Report

.

In keeping with TSC's editorial policy, Rappaport doesn't own or short individual stocks. She also doesn't invest in hedge funds or other private investment partnerships. She appreciates your feedback. Click

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