According to the Federal Reserve Bank of Atlanta's GDPNow model, the US economy is expected to contract by 1.6% in the second quarter, down from the July 15 forecast of -1.5%.

"After this morning's housing starts report from the US Census Bureau, the nowcast of second-quarter real residential investment growth decreased from -8.8% to -10.1%," Atlanta Fed explained in its publication.

Market reaction

The greenback stays on the back foot following this report. The US Dollar Index, which tracks the dollar's performance against a basket of six major currencies, was last seen losing 0.75% on the day at 106.60.