Despite the selloff of riskier assets such as stocks and commodity currencies, euro reversed its recent downtrend and jumped in NY session on short-covering amid speculation that European monetary officials may have intervened to support the single currency. Euro was also supported as IMF chief Strauss-Kahn said euro 'is not finished' and stated 'must fight speculators'. The Japanese yen rallied broadly due to massive unwinding of yen carry trades on risk aversion due to lingering worries on European debt crisis.

Despite a brief rebound to 1.2438 at European opening, the single currency swiftly retreated from there and fell to an intra-day low of 1.2296 in NY morning. However, the pair rebounded from there and picked up more upward momentum after triggering stops above 1.2440/50. Euro extended intra-day rally and rallied to as high as 1.2598 on active short-covering as many position traders were holding massive short positions on euro. Strauss-Kahn added that priority for big eurozone countries should be growth and it was not necessary for some countries to cut deficits to 3% by 2013. Besides, he called for greater coordination in Europe. Later, France's Sarkozy said France and Germany didn't have any difference while he had almost daily contact with German Chancellor Merkel. Britain's new prime minister Cameron also said it was in Britain's interest for the euro to be a success. However, the single currency retreated in NY afternoon session as DJI extended intra-day decline and ended the day down 376 points or 3.60% at 10068. Cross-buying in euro also helped the single currency as eur/chf surged from 1.4138 to 1.4457 on speculation of SNB's intervention.

Versus the Japanese yen, the greenback tumbled from 91.88 to 88.95 on active cross buying in yen on renewed risk aversion due to investors' lack of confidence in European leaders' ability to contain the region's debt crisis. Eur/jpy nose-dived from 114.11 to 109.47, gbp/jpy slumped from 132.73 to 126.78 and aud/jpy fell from 78.01 to 72.57. FTSE, CAC and DAX all dropped by more than 1.5%. However, euro's intra-day rally improved market sentiment and usd/jpy rebounded from said low, ending the day at 89.68.

The Australian dollar, New Zealand dollar and Canadian dollar, known as the three commodity currencies, tumbled versus the greenback as Europe's debt woes rattled the market's confidence in the global economic recovery. Aud/usd plunged from 0.8496 to 0.8150, nzd/usd slumped from 0.6878 to 0.6619 while usd/cad rallied from 1.0427 to 1.0721.Gold also dropped sharply fm 1197.60 to 1175.50 before recovering. U.S. June crude futures dropped by $1.86 to settle at $68.01 a barrel on Thursday.

The British pound tumbled from 1.4468 and reached a fresh 14-month low at 1.4228 in NY morning. However, cable quickly rebounded from there in tandem with intra-day rally in euro to 1.4460 in NY afternoon before easing.

In other news, Eurogroup's Chairman Juncker said he didn't think markets were acting in rational way; euro's decline was not due to ECB's action and such decline was likely due to perception that growth would slow down due to budget cuts. He also added that he discussed euro's rapid decline with Japan's finance minister Kan and immediate intervention action was not needed but central banks were in close contact.

Economic data to be released on Friday include: Japan Leading indicators, Germany GDP, PMI, EU PMI, Germany Ifo index, EU Current account, Canada CPI  and Retail sales.