The loonie on Wednesday had touched its strongest in almost three weeks at C$1.3573, as worries that political uncertainty in Washington would undermine the Trump administration's ability to deliver a promised boost to USA growth weighed on the greenback.
The dollar dropped 0.5 percent to 112.64 yen, slipping further from its highs near 114.40 yen touched last week.
On Wednesday the Justice Department appointed a former Federal Bureau of Investigation director as special counsel to investigate alleged Russian interference in November's presidential election, as well as possible collusion by President Donald Trump's campaign team.
About 8.37 billion shares changed hands on USA exchanges in the busiest trading day since March 21, compared with the 6.9 billion-share average for the last 20 sessions.
Bank notes of different currencies, including Euro, U.S. Dollar, Turkish Lira or Brazilian Reais, are photographed in Frankfurt, Germany, in this illustration picture taken May 7, 2017. US stocks recovered ground after a near 2 percent selloff on Wednesday on the S&P 500, as upbeat economic data emboldened investors to return to the market. The White House has denied the account.
"I'm interested to se if we can continue to keep the momentum throughout the day".
However, it's important to note that U.S. stock investors have made a habit of buying on weakness throughout the eight-year bull market.
He warned, however, about joining the buying spree.
"Our sense is they owe more to naivete and inexperience than to things truly sinister but the fact remains that political capital is being frittered away and the odds of achieving much in the way of reform, de-regulation or investment stimulus this year or next are falling rapidly".
The developments have left investors wondering whether the administration would be able to deliver pro-growth policies and tax reductions for corporations, as per Trump's campaign pledges.
The Dow Jones Industrial Average .DJI fell 370.12 points, or 1.76 percent, to 20,609.63, the S&P 500 .SPX lost 43.35 points, or 1.81 percent, to 2,357.32 and the Nasdaq Composite .IXIC dropped 158.63 points, or 2.57 percent, to 6,011.24.
It was last up 0.1 percent at $1.1089.
Treasury yields were barely changed after a sharp drop on Wednesday.
Chinese growth cooled in April according to a variety of economic indicators ranging from factory output to retail sales as authorities clamped down on debt risks in an effort to stave off a potentially damaging hit to the economy.
A Japan-traded ETF tracking Brazil's Ibovespa Index tumbled 8 per cent, the most since November, as political crisis returned to the country after last year's impeachment process. Gold also shot up 1.8 percent, to $1,259.00 an ounce.
A recent run of disappointing US economic data, including inflation, retail sales and housing starts has also weighed on the dollar, tempering expectations for higher interest rates.
Brent crude LCOc1 gained 1.1 percent to settle at $52.21 per barrel, while USA light crude CLc1 rose 0.8 percent to settle at $49.07. "Should the political storm die in Washington, the rally will lose steam", said Jeffrey Halley, senior market analyst at OANDA. The dollar recovered some ground against the yen Thursday, rising to Yen111.23, from Yen111.35 in late trading Wednesday.
Crude dropped 0.4 per cent to US$48.89 a barrel, after jumping 0.8 per cent in the previous session. Australia's S&P/ASX 200 sank 1.1 percent to 5,786.00.
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