The dollar maintained a bullish tone against the majors in New York, as traders were optimistic about the second term for President George W. Bush and American Jobs Creation Act of 2004 that gives enormous tax breaks for US corporations, which repatriate capital back to the US.
Traders largely ignored the mixed US economic data as the markets were primarily focused on geopolitical news. The leading indicators were 0.2 percent higher for December, boosted by gains in US equities and consumer confidence with the Philadelphia Fed index falling to 13.2 from 25.4 on growth in inventories.
The US dollar was quoted at 1.2956-59 against euro, 1.8721-26 versus pound sterling and 103.37-41 against the Japanese yen at 23:00 GMT.
The sell-off in global markets came full circle after yesterday's disappointing earnings reports sent the world equities tumbling while negative earnings surprise from EBay added more bearish sentiment to the broader market.
Dow Jones Industrial Average fell 0.7 percent to 10,471.47, the Standard and Poor's 500 slipped 0.8 percent to 1,175.14 while NASDAQ Composite gave up 1.3 percent to 2,045.88.
EBay fell 19.1 percent to $83.33 as the company's sales and earnings were both below expectations.
Qualcomm shed 8 percent to $37.78 after the company lowered its earnings guidance. Capital One Financial shares declined 4.2 percent to $78.66 as the company reported lower than expected earnings.
United Healthcare lost 1.9 percent to $86.63 despite raising its earnings estimates Blue chips also weighed on a broad sentiment as Ford gave up 3.8 percent to $13.46.
The NYMEX crude oil futures contract for February delivery fell 64 cents or 1.4 percent to $46.91 per barrel as the Energy Department that reported US oil inventories increased more than expected.
The COMEX gold futures contract for February delivery fell 70 cents to $422.60 an ounce as the dollar firmed against the majors.
The US treasuries rallied after a sharper than expected decline in the Philadelphia Fed manufacturing index combined with sharp sell-off in equity markets prompted investors to switch to the safe haven of US treasuries. The 10 Year US Treasury Note gained 1/16 to 100 23/32 pushing yield down by 1 basis point to 4.16 percent. The 10 Year US Treasury Note futures contract for March delivery gained 0.05 to 112.02.