The European Central Bank (ECB) will take necessary measures to protect the euro common currency, President Mario Draghi said on Thursday. His comments sparked a global rally in risky assets amid expectations that the ECB will intervene in markets to rein in spiraling borrowing costs.

Markets rallied across Europe and the US yesterday after ECB President Mario Draghi said that the central bank would do whatever was necessary to protect the eurozone from collapse, raising hopes for action to ease strains for highly indebted member states like Spain and Italy.

Draghi spoke yesterday at the Global Investment Conference in London, saying that surging sovereign-bond yields may fall within the ECB’s jurisdiction.

Draghi's comments come ahead of the ECB's policy-setting meeting next week

The dollar traded within striking distance from a two-week low against the euro. The greenback headed for a weekly loss as improvement in global risk tolerance damped demand for the US currency as a safe haven.

Growing speculation of another round of quantitative easing (QE) from the US Federal Reserve is also weighing on the dollar.

Meanwhile, the euro maintained a two-day advance against the dollar and yen. The common currency has dropped 4.5% in the past three months. The yen has gained 7% and the dollar has risen 4% over the same period.

The euro's advance, however, will be capped due to uncertainty surrounding Greece's restructuring efforts.

Easing fears about Spain's fiscal plight drove Spanish 10-year bond yields below 7% on Thursday, after they hit a euro-era peak above 7.6% earlier in the week.

Canada’s dollar climbed to the strongest since May versus its US counterpart amid a global risk-on rally while the pound rose the most against the dollar since December 2010.