LONDON (MarketWatch) -- High-yielding currencies like the Australian dollar and the British pound came under pressure as investors fretted about declining stock markets and an unraveling world economy.
Sterling dropped 0.8% to $1.4831, and the Australian dollar lost 1.6% to 62.64 cents.
Other major currencies saw minor gains against the greenback.
The euro rose 0.2% to $1.2526, while the dollar slipped 0.2% to 95.51 yen.
International stock markets saw heavy pressure Thursday after Citigroup's big stock price drop on Wednesday as well as the FOMC minutes which lowered the U.S. central bank's outlook on GDP and raised forecasts for unemployment.
The Nikkei 225 slumped nearly 7% in Tokyo. See Asia Markets.
"Currency markets were more subdued but markets are clearly holding closely to safe havens," said currency analysts at UBS.
The sterling drop even came as U.K. retail sales slipped by a less-than-forecast 0.1% in October.
"Overall, the retail numbers were better than expected -- but still show stagnation in underlying growth prospects as consumers suffer from the decline in credit availability, the squeeze on real disposable incomes and worries about unemployment," said Charles Davis, an economist at the Center for Economics and Business Research.
Davis expects the Bank of England to follow November's 1.5 percentage point rate cut with another half-point cut, which would take U.K. rates down to 2.5%.
Weekly jobless claims are due at 8:30 a.m. Eastern and leading indicators for October and a Philadelphia-area economic gauge for November also are due for release.
