Top U.S. and Chinese negotiators wrapped up their first day of trade talks on Thursday, with U.S. President Donald Trump welcoming what he called a "very, very good negotiation with China".
Business groups expressed optimism the two sides might be able to de-escalate their trade war, which has sapped economic growth around the globe.
"Investors are ready to celebrate any form of a U.S.-China trade deal, even a limited one," said FXTM analyst Han Tan.
The Australian dollar was up 0.2pc at 0.6776 per U.S. dollar after rising to a two-week high of 0.6782 overnight.
China's yuan was stable after hitting a three-week high in the Asian trading session of 7.0890 per dollar.
The safe-haven yen on the other hand slipped to 108.13 per dollar, its weakest since Oct. 1, as investors' risk appetite improved.
The euro was up slightly at $1.1018, not far from the three-week high it reached on Thursday against the dollar, which usually appreciates as a safe-haven currency when trade relationships worsen.
Sterling was up marginally at $1.2455, just under a two-week high it hit after rising 2pc overnight - its largest daily percentage gain in seven months, driven by hopes for a Brexit resolution. Euro/sterling was little changed at 88.445 pence.
Irish Prime Minister Leo Varadkar said on Thursday a Brexit deal could be clinched by the end of October to allow the United Kingdom to leave the European Union, after what he called a very positive meeting with Britain's Boris Johnson.
Marshall Gittler, chief strategist at ACLS Global, said he found it hard to change his pessimistic view on the pound, "especially since we don't know what the two sides actually discussed."
"I'm also worried that anything that's acceptable to Ireland might prove unacceptable to the rest of the UK Parliament, and enough MPs might be willing to choose national suicide rather than accept the unacceptable. I will therefore retain my negative bias for now, but recommend watching the situation closely," Glitter said.
Elsewhere, the Swedish crown, which has been beaten up by the prospects of dismal global economic growth as result of trade tensions, got pushed up to a four-day high of 10.8180 against the euro, though its long-term weak trend remains unbroken for now.
The Norwegian crown was up 0.2pc at 10.0280 against the common currency.