The U.S. dollar slumped to levels last seen in the immediate aftermath of Trump's surprise victory in November, trading as low as 97.29 against a basket of its global peers as investors reacted to a report from the Washington Post that the President had asked his former FBI Director James Comey to drop and investigation into Michael Flynn, his former National Security Advisor, relating to alleged ties with Russian Federation.
Right now, the market has to weigh up whether the slide in stocks, the S&P 500 is down 40 points from this week's record high, is enough of a reflection of the political risk that has emerged in Washington. "The U.S. administration's protectionist policies and softer data have been the primary drivers".
"We've seen the Trump agenda derailed and try to get back on track several times".
The Swiss franc hit a six-month high of 0.9774 to the dollar on Wednesday before easing back to 0.9789.
On Wednesday, the Justice Department appointed former Federal Bureau of Investigation chief Robert Mueller on Wednesday as special counsel to probe possible ties between Russian Federation and Trump's 2016 presidential campaign.
The dollar fell to fresh three-week lows against the safe haven yen, with USD/JPY down 0.35% to 110.43 having ended the previous session down 2.03%, the largest one day decline since July 29, 2016.
The yen showed limited response to data that showed Japan's GDP grew an annualised 2.2 per cent in the first three months of this year, beating economists' forecast of 1.7 per cent rise.
The franc, a traditional destination for capital in times of financial or political stress, hit a 10-day high against the euro and its strongest since Trump's election last November against the dollar. The Dow Jones Industrial Average closed 1.8% lower on Wednesday, while the S&P 500 index fell by 1.6%.More news: Alibaba reveals $6 bln share buyback as misses EPS forecast
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It fell to a three-week low of 110.53 yen on Thursday before bouncing back a tad to 111.09 yen, up 0.3 per cent from late United States levels, on Japanese bargain-hunting.
OIL: Benchmark U.S. crude rose 13 cents to $48.79 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price global oils, was up 24 cents to $51.89 per barrel in London.
The pan-European FTSEurofirst 300 index lost 0.51 percent and MSCI's gauge of stocks across the globe shed 0.36 percent.
Gold fell on Thursday as a bounce in the dollar prompted some buyers to cash in gains after its biggest one-day rally in almost a year, though uncertainty over the outlook for the Trump presidency underpinned the metal near two-week highs.
"Risk aversion is rife once again with the brewing political storm surrounding President Trump in the USA largely being blamed", said Craig Erlam, a market analyst with retail broker Oanda in London. Gold also rose, with spot prices trading 1.7 per cent higher.
"People are selling stocks, buying bonds and selling the dollar - what we're seeing is a typical risk-off market", he told AFP.
Benchmark Brent crude futures ended the session 30 cents higher at $52.51 a barrel while US crude futures settled up 28 cents at $49.35. While a strong corporate earnings season is underpinning share prices even as hopes of a fiscal stimulus this year fade, the dollar's outlook is mostly being driven by the Fed.
Oil prices traded higher as Brent crude futures rose 0.72 percent to trade at $48.92 per barrel, while US WTI crude futures gained 0.53 percent to trade at $48.92 a barrel. On Tuesday the S&P 500, the benchmark favored by professional investors, marked its 15th straight day of moving up or down by less than 0.5 percent.