While some are claiming the ugly initial claims number, I can't fathom how this makes sense (is the weak employment market a surprise to anyone at this point? And how does this explain the dollar rally?).
My thought... I think the legit issues within the Eurozone are causing some 'dollar shorts' / 'risk asset longs' to reconsider (or forced to unwind) their positions. As detailed back in November's post (Did We Learn Anything? Carry Trade Edition), any shift in sentiment has the potential to move markets dramatically as so many levered "investors" have piled in on the same short dollar trade. Once an unwind of any carry trade begins, there is the potential for a pretty bad feedback loop.
My guess is that things (assets / non-USD currencies) will bounce back from here over the short-run (bought some pretty cheap options for a short-term rebound), but if it doesn't... things may get VERY ugly, VERY quickly.
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