USD - The dollar has reversed early losses nearly across the board after US economic data registered better than expected. The second release of Q2 GDP was revised higher, gaining to 1.7% from 1.5% in the previous reading. The gain was led by an unexpected jump in personal consumption, which rose by 1.7% versus last month's gain of 1.5%. Elsewhere, housing market data staged a rebound in July with pending home sales jumping by 2.4% after a 1.4% contraction seen in the previous reading, and better than the 1.0% that was anticipated. With the market squarely focused on the Fed's upcoming Jackson Hole summit, the better-than-expected economic data is prompting investors to reduce bets on the inevitability of QE3. While policymakers have admitted that a third asset purchase program is "under consideration" the market will likely only gain further clarity rather than any concrete announcements from Bernanke's speech on Friday. Investors will take note of this afternoon's Fed Beige Book data - a review of regional economic activity - but it will likely fall in line with the recent upbeat economic releases. The reduced expectations of further monetary easing are thus providing the greenback with a modicum of support against its major counterparts.

EUR - The euro fell back towards the middle of its recent ranges as investors weigh steadily improving economic data out of the US against continued political and monetary discord within the Eurozone. Debate over the structure of the European Stability Mechanism - the region's permanent "bailout" fund - is making headlines this morning. On one hand, German Chancellor Merkel says that it is her "conviction, as far as the ESM is concerned, that a banking license is not compatible" with current EU treaties. She went on to insist that ECB President Draghi is in agreement with her that the ESM should not have access to direct lending from the central bank. On the other side of the aisle, Italian PM Monti is urging policymakers to not be so rigid in their though process. Monti says the ESM should "be seen in the perspective of a broad mosaic. Some things that aren't possible today under current conditions could become possible tomorrow under different conditions. Modifications to the treaties can be asked for." Consequently, the EUR has pulled back from its recent highs as the political infighting undermines investor confidence. Nevertheless, the common currency will likely remain supported within its recent ranges as lower debt yields in Italy and Spain and generally improved global economic data provide support.

GBP - Sterling is slightly stronger this morning against both the USD and EUR as BoE policymakers reassured investors that the Bank's operations are meant to support the economy, not the banks. However, Markets Director Paul Fisher said that they are "not expecting this to be something which cures the economy in a few months. It will take a while to work through." With little data to convince investors otherwise, they are taking the comments as a sign the BoE will remain on hold at their policy meeting next week.

JPY - The yen slipped in early trading as the better-than-expected data out of the US encouraged a bit of risk appetite. Japan's top currency official also told reporters that the yen's recent advances against the dollar have been excessive and do not reflect the Japanese economy's weak fundamentals. While intervention doesn't appear to be imminent, investors appear unwilling to be caught long yen below the 78 handle.

Commodity Currencies - The commodity linked currencies are mostly lower this morning as raw goods begin the day in the red. Oil fell to $95/bbl, gold dropped to $1655/oz and copper slipped to $344/lb. The CAD was the only currency of the group to gain, reversing overnight losses after the positive economic data out of the US - Canada's primary trading partner. The AUD extended its recent slump this morning, nearing a one-month low against the USD, amid concern that the Australia is vulnerable to the apparent slowdown in global growth. Data released overnight showed Australian construction activity unexpectedly declining by 0.2% after a 7.8% gain in the previous reading and falling short of the 0.5% that was expected.