Wednesday's revival in the dollar after investors parsed the FOMC statement clinically appears to have dissipated by Thursday morning. The Fed's fine line confirmed that economic conditions have indeed improved but indicated that it was in no mood to remove its foot from the accelerator. However, a decent decline in weekly unemployment claims today has spurred enthusiasm that a recovery is underway and that a transitioning employment picture through the remainder of the year might yet gel the recovery. The dollar is displaying strength against the British pound, yet this story has become one of sterling weakness today rather than dollar strength.

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A day after the Bank of England's rosier take on the economy, the pound once again finds itself under attack. Currently the pound just breached a three-week low against the dollar to trade at $1.6084 after Bank of England Governor Mervyn King told a regional newspaper that a weaker pound was welcome in that it would help better the path for exporters. His remarks have incited sterling weakness today although they are not a change in philosophy. Mr. King is reiterating comments he made earlier in the summer.

At the earlier September policy meeting the Bank voted to leave the deposit rate on bank deposits unchanged. Mr. King had drawn attention to the potential for a potential decline in the amount it pays when he recently addressed lawmakers. If anything the fact that this rate was left unchanged was somewhat of a surprise. However, today's Daily Telegraph carried a shock-story that the Bank has called a crisis meeting of leading economists to discuss both the Bank's quantitative easing policy and the weakness in the pound.

While the central bank has denied any crisis meeting is planned, we have to note that previous comments from Mr. King and company do not appear worried by a pound that indeed would spur exports. Over the summer the French and Irish took pot-shots at the British for allowing such weakness. The Bank seemed unconcerned with the pound's level. The Telegraph story appears way off base in its content from a personal opinion.

The pound lost significant ground to the euro, which currently buys 91.42 pennies.

The euro also rallied following the Munich-based IFO business climate index, which rose to 91.3 and so short of expectations. However, the slow-but-sure degree of incremental growth in the Eurozone continues and apparently the euro is a preferred unit of exchange compared to the dollar at present. The euro buys $1.4727 after earlier hitting $1.4800.

Earlier in the day gains for commodity-trading countries and those of emerging markets have suddenly given way to losses after data showed that existing U.S. home sales unexpectedly declined from July by 2.7%. That leaves the annualized pace of home sales at 5.1 million with ongoing pressure from distressed sales weighing on prices.

The mid-morning surge in the value of the dollar has seemingly picked up its pace as a result of this data sustaining hits across major trading pairs. The euro reacted by falling back through $1.47, while the Canadian dollar slumped to 92.05 U.S. cents from 92.89 Wednesday. The Aussie dollar has slipped to unchanged at 86.95 after an earlier assault on 87.70.

The theme of risk aversion is evident with the value of the yen accelerating versus the dollar to stand at ¥91.14.