The sleepy start to Asian trading was rudely jolted by a Chinese state media report which at first raised hopes of an immediate cut to banks' reserve requirements. But the full report by Xinhua merely said the central bank had pledged to increase liquidity supply "at an appropriate time".
The Australian dollar jumped about 30 pips to a session high of $1.0386, before ceding some ground to last trade at $1.0370. It was still ahead of its New York close of $1.0348.
However, the real winner was still the pound, which surged overnight on the back of what some traders said was a hawkish-sounding central bank.
Minutes of the Bank of England's April policy meeting showed the central bank was worried about inflation and long-standing advocate of more quantitative easing, Adam Posen, had dropped his call for more stimulus.
As a result, sterling climbed about one U.S. cent to $1.6043 , bringing the April 2 peak of $1.6063 back in focus. It last traded at $1.6025. It also rallied against the euro, which skidded to a 20-month low around 81.70 pence.
The Swedish crown also benefited from a less dovish central bank. It rose to its highest in nearly two weeks against the euro after the Riksbank quashed talk of an early rate cut. The single currency fell as low as 8.8325 crown and was last at 8.8545.
"With central bank meetings and minutes out of the way, the market direction will once again likely be steered by euro zone peripheral stress. The big litmus test will be today's Spain bond auctions," analysts at BNP Paribas wrote in a note.
"A decent result, especially as liquidity improves following Easter holidays, could be a swing factor."
Spain will test investors' confidence in its debt-laden economy when it tries to sell new 2- and 10-year bonds. Earlier this week, Madrid successfully raised 3.2 billion euros in the debt market, but had to pay almost double from a month earlier.
The euro stood at $1.3122, having recovered from a dip to $1.3058 overnight. It looked well supported around $1.3000, but could struggle above $1.3200 with the April 12 high of $1.3213 likely to offer some resistance.
The modest recovery in the euro saw the dollar index retreat to 79.569 from Wednesday's high of 79.861. Against the yen, the dollar traded at 81.34, taking a breather after rebounding from a seven-week low of 80.29 on Monday.
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