The political jitters coming out of the United States remained the dominant factor for traders, however.
Banks led the losses on the local market, partly because Westpac traded ex-dividend, but also due to heavy selling of financial stocks on Wall Street, Patersons Securities economist Tony Farnham said. In Asian trade, the dollar recovered slightly Thursday to trade up 0.2% at ¥111.01. Asian stock markets were mostly lower on Wednesday as a rise in political uncertainties dented risk sentiment with in. "While the market is fishing for a base this morning, momentum does suggest there is the potential for a deeper US dollar sell-off", OANDA's Innes said.
Likewise shares in Swedish debt collector firm Intrum Justitia dropped more than 8 percent after it proposed a string of divestments in order to assuage European Commission concerns over its planned merger with Norwegian rival Lindorff.
A drop in global oil prices that went along with weaker stock markets hurt commodities-linked currencies including the Canadian dollar and the Norwegian crown down by 0.3 and 0.7 percent respectively against the greenback.
The Dow Jones Industrial Average was down 333.24 points, or 1.59 percent, to 20,646.51, the S&P 500 had lost 38.76 points, or 1.61 percent, to 2,361.91 and the Nasdaq Composite had dropped 141.99 points, or 2.30 percent, to 6,027.88.More news: Djokovic advances to 3rd round in Madrid Open
Gold has been a big victor from the ongoing political turmoil in Washington, as the Trump administration lurches from crisis to crisis.
The White House quickly denied the New York Times report, saying in a statement it was "not a truthful or accurate portrayal of the conversation between the president and Mr. Comey". The latest centers on a memo that Comey wrote that showed the president asking him to shut down an FBI investigation into Flynn. Another brewing controversy is Trump's passing of classified intelligence to the Russian foreign minister earlier this week.
Trump took to twitter on Tuesday to defend his decision to share sensitive information with Russian Federation, insisting that he had "the absolute right" to share "facts" about terrorism with Russian Federation.
Mike van Dulken, head of research at Accendo Markets, said investors are having to "digest the latest real-life episode of House of Cards".
The dollar has borne much of the fallout from the Trump disclosures.More news: Wenger urges Arsenal fans to ignore boycott call
Wednesday was a rude awakening for the markets with the Dollar and U.S Treasuries buckling at the knees as the markets continued to respond to the noise from Capitol Hill, with no macroeconomic data for the markets to be distracted by, the Dollar Spot Index falling by 0.54% on the day.
Tokyo plunged 1.3 percent, while Hong Kong shed 0.5 percent in the afternoon, Sydney shed 0.8 percent, Seoul was 0.3 percent off and Singapore also gave up 0.3 percent.
The dollar took a beating, as the euro broke above $1.11 to levels not seen since Trump's election win in November, while the yen was also piling pressure on the U.S. unit. MSCI's Emerging Market Index snapped a seven-day advance. Japan's Nikkei 225 dropped 0.5 percent to 19,814.88 as the yen gained against the USA dollar. AUD/USD dipped 0.15% to 0.7415.
The losses came despite another record close in London and NY, though in early European trade Wednesday, London dipped 0.3 percent, Paris shed 0.6 percent and Frankfurt gave up 0.8 percent. Australia's S&P/ASX 200 sank 1.1 percent to 5,786.00.More news: S&P 500, NASDAQ hit record highs as oil, tech climb