The U.S. currency also benefited from a strong private-sector payrolls report for January, suggesting the world's largest economy was on a stable growth path.
The focus, though, remained on the coronavirus, with the yen and Swiss franc falling after news reports said a Chinese university had found a drug to treat infected people, and researchers in Britain had made a "significant breakthrough" in finding a vaccine. Traders used the headlines to load up on risky assets.
"There is some optimism about having potentially a way to treat the symptoms from having the coronavirus," said Erik Nelson, currency strategist at Wells Fargo Securities in New York.
The World Health Organization, however, played down the reports of "breakthrough" drugs being discovered, saying that there are "no known effective therapeutics."
The virus so far has claimed 490 lives, most in and around the locked-down central Chinese city of Wuhan, where it emerged late last year. There have been two deaths in the Philippines and Hong Kong, both following visits to Wuhan.
Investors overall were heartened as China's central bank injected substantial liquidity into the financial system to cushion the economic fallout from the virus.
"The response we're seeing from Chinese authorities is not surprising," said Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto. "They're doing everything they can to shore up investor confidence, and frankly we expect more of this kind of reporting."
Risk sentiment also improved after the ADP National Employment Report showed that U.S. private-sector payrolls increased by 291,000 in January, far above expectations for an increase of 156,000 jobs. January's job gains were the largest since May 2015.
In addition, U.S. services sector activity picked up last month, with industries reporting increases in new orders. The Institute for Supply Management's non-manufacturing index rose to 55.5 last month, the highest since August.
In afternoon trading, the dollar rose 0.3% against the yen to 109.83 yen, after earlier hitting a two-week high of 109.84 yen. Against the Swiss franc it rose 0.5%, to 0.9738 franc.
The dollar held gains after President Donald Trump was acquitted late Wednesday in his U.S. Senate impeachment trial. The Senate voted 52-48 to acquit him of abuse of power stemming from his request that Ukraine investigate political rival Joe Biden, a contender for the Democratic nomination to face Trump in the Nov. 3 election.
The Australian dollar, a barometer of risk appetite towards China given Australia's close economic ties with Beijing, was also well-bid, up 0.2% versus the dollar at US$0.6754.
The Chinese currency in the offshore market also rebounded 0.2% against the dollar
The Hong Kong dollar rose sharply as well, hitting its highest level since March 2017 against the U.S. dollar, which was last down at HK$7.7619.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Richard Chang and Leslie Adler)
By Gertrude Chavez-Dreyfuss
