Foreign exchange markets have remained relatively calm despite big moves in bond markets this week, where investors have piled into government debt in anticipation of a global growth slowdown.
But the safe-haven Japanese yen has strengthened as investors looked for safety.
After initially falling in early trading on Thursday, the currency was back in demand as European stock markets fell and investors flooded into safer assets.
The latest turbulence in financial markets was triggered by an inversion in the US Treasury yield curve for the first time in 12 years.
The closely watched inversion, where two-year yields trade higher than 10-year yields, has historically preceded previous economic recessions.
"Market-related headlines this morning have been dominated by yield curve inversion and the recessionary implications that follow," Rabobank said in a note to clients.
Sentiment was already fragile after economic data from China and Germany earlier in the week revealed the extent of the damage the China-US trade dispute is causing to the world economy.
The yen, down 0.3pc at the start of the London trading session, was last up 0.1pc at 105.85.
On Wednesday, the yen rallied 0.8pc versus the greenback, its biggest daily gain in two weeks.
The dollar index, which measures its value against a basket of six major currencies, fell 0.1pc to 97.853, unchanged on the day.
The euro edged higher against the dollar, rising 0.2pc to $1.1155.
NORWAY FALLS
Elsewhere, Norway's crown weakened after its central bank, the Norges bank, said its policy outlook was now more uncertain, raising doubts about whether it would raise rates later in 2019.
The central bank has been an outlier with its plans to hike rates while most policymakers turn more dovish in the face of worsening global growth.
"We regard this as a signal that Norges Bank wants to gain flexibility in order to evaluate important incoming domestic data and global developments before deciding on the next possible rate hike," said SEB strategist Erica Blomgren Dalstø.
The crown was last down 0.2pc against the euro at 10.022 crowns.
The Australian dollar rose as much as 0.5pc to $0.6791 after data showed the Australian economy added a forecast-busting 41,100 new jobs in July.
However, reflecting the rising global economic risks, futures markets still imply an 84pc chance of a quarter point rate cut to 0.75pc in October, with November seen better than 100pc.
Reserve Bank of Australia Deputy Governor Guy Debelle also highlighted the risks from the trade war in a speech earlier on Thursday, saying it could trigger a self-fulfilling global downturn.
Sterling edged higher, hitting $1.2101, up 0.4pc on the day as better-than-expected retail sales data for July supported the pound.