There was also relief when the latest surveys from China showed some improvement, with a measure of the services sector markedly stronger in January. That left the kiwi holding firm at $0.6900, having touched a two-month peak of $0.6924. It jumped 0.9 percent overnight to crack resistance around $0.6782.
The Aussie dollar had levelled out at $0.7256, after climbing 1.3 percent on Wednesday. The rally also took out major chart resistance at $0.7235, which should now provide technical support. The main gains came after the Fed dropped any reference to further rate increases in its latest policy statement, just a month after re-committing to more hikes.
"The language changes to the statement were very dovish," said Michelle Girard, chief US economist at RBS. "The changes and the tone of the Fed Chair's press conference suggest additional rate hikes this year may no longer be the base case." "It suggested no predisposition as to the direction of the next move in interest rates."
Short-term Treasury yields fell sharply in response, dragging the US dollar down broadly. Australian bonds got a smaller boost, with three-year futures up 1.5 ticks at 98.275. The 10-year contract edged up 1 tick to 97.7700.