The dollar tumbled against the majors in New York as traders reacted to the number of economic and geopolitical issues.
The dollar bears roamed the market after the US trade deficit printed at $56.4 billion in December, following a record deficit of $59.3 billion in November. In recent months the dollar weakness was attributed to the ballooning twin deficits, as the US imported more than it exported and many traders remain skeptical about the US's ability to continue funding its mounting debts.
The greenback was clobbered further after the North Korea revealed that it has nuclear weapons and is pulling out of disarmament talks with the West and its allies. The latest development on the geopolitical front rattled the markets, with the dollar plunging over 150 pips against the euro.
The US dollar was quoted at 1.2872-75 against the euro, 1.8692-97 versus the pound and 105.81-85 against the Japanese yen at 22:30 GMT.
Wall Street stocks climbed higher as better than expected jobless claims boosted investor's confidence.
The Dow Jones Industrial Average rose 0.8 percent to 10,749.61, and the Standard and Poor's 500 climbed 0.4 percent to 1,197.01. The NASDAQ Composite rose fractionally to 2,053.10.
Telecom sector was in play today after the news report revealed that Verizon made a bid proposal to MCI. Shares in MCI fell 1.9 percent to $20.46 on the news. Verizon was unchanged at $36.04 while Qwest fell 2.8 percent to $4.16.
Devon Energy, the oil and gas exploration company gained 3.9 percent to $42.03 after oil prices climbed higher.
The NYMEX crude oil futures contract for Match delivery gained $1.64 to $47.10 per barrel as the International Energy Agency reported that the global demand for petroleum products is growing faster than expected.
COMEX gold futures contract for April delivery rallied $4.20 to $418.70 an ounce after the release of the US trade deficit.
US treasuries posted the biggest decline in over two month, as trades sold the bonds after better than expected jobless claims fueled speculation about the growth of the US economy. The 10 Year Treasury note fell 3/4 to 101 11/32 pushing the yield higher by 10 basis points to 4.08 percent. The 10 Year Treasury note futures contract fell 0.17 to 112.26.