Update - 21-09-09.  The corrective trend is likely to continue in the short term ahead of the Wednesday FOMC meeting.

Overall confidence in the dollar will remain generally weak. The international environment is liable to be less benign in the short term with unease over the global economy and renewed doubts over the Euro-zone banking sector which will tend to provide some degree of dollar protection. There will also be pressure for a more substantial correction after recent sustained losses. The dollar could strengthen to the 1.4550 region on position adjustment where there is likely to be strong initial Euro buying support.

The dollar weakened to test fresh 2009 lows beyond 1.4750 in early Europe on Thursday, but then proved to be broadly resilient with the currency over-sold after nine consecutive daily declines on a trade-weighted basis.

The US data was slightly stronger than expected, although it was relatively close to expectations which stifled the impact. US housing starts rose to an eight-month high of 0.60mn for August  from a revised 0.59mn the previous month.

The Philadelphia Fed index rose to 14.1 from 4.1 the previous month which was the highest reading since June 2007, although the underlying components were less reassuring and suggested that the recovery may prove brittle. Initial jobless claims fell to 545,000 in the latest week from 557,000 previously. The data continues to suggest an underlying US recovery, but that there are also still important vulnerabilities