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Investors on Wednesday were quick to latch on to media reports that a U.S. trade team will travel to Beijing the week of Jan. 7 to hold talks with Chinese officials.

Markets also lapped up data showing U.S. 2018 holiday sales rose 5.1 percent from a year ago to over $850 billion, the strongest gain in six years.

“Investors are coming back to the U.S. markets after a build-up of lot of fearmongering..this would be supportive of the dollar as well as treasury yields and stocks,” said Stephen Innes, head of Asian trading at Oanda.

The dollar index, a gauge of its value versus six major peers, slipped 0.2 percent in Asian trade, after gaining 0.5 percent on Wednesday.

The U.S. currency lost about 0.3 percent versus the yen JPY=, fetching 111 at 0253 GMT after bouncing 1 percent overnight and breaking a safe-haven driven 8-day stretch of gains for the Japanese currency.

 “If risk sentiment keeps improving and Dow futures extend their gains in the Asia session, I would expect dollar/yen to move higher still,” Innes said, though he warned that it was too early call a turn in risk sentiment.

Another factor lifting market sentiment was easing tensions between the White House and the U.S. central bank. White House economic adviser Kevin Hassett said that Fed Chairman Jerome Powell’s job was “100 percent” safe.

The euro EUR= fetched $1.1375, strengthening around 0.25 percent. The single currency is set to end the year lower by 5 percent as weak economic fundamentals in Europe, political tensions in France and Italy and a dovish European Central Bank had made investors favor the dollar over the euro in 2018.

Sterling GBP=, which has been battered by Brexit woes in recent months, was firmer at $1.2659, having lost 0.4 percent the previous session.

·         Markets are bracing for a more difficult 2019, with risks such as interest rate hikes from the Federal Reserve and an escalation in U.S.-China trade tensions at the top of many people's minds. But the possible impeachment of Trump has rarely been discussed, partly because it still isn't clear whether Democrats will go down that route when they take control of the House in 2019.

Being impeached doesn't mean being kicked out of office. On the U.S. federal level, it's a process whereby a simple majority vote in the House can accuse a civil official, including the president, of an "impeachable" offense. That accusation would then move to the Senate, which would decide whether to convict the official.

·         The U.S. Department of Commerce’s Bureau of Economic Analysis and Census Bureau will not publish economic data during the ongoing partial government shutdown, the Wall Street Journal reported on Wednesday, citing an agency spokeswoman.

“Due to the lapse in Congressional Appropriations for Fiscal Year 2019, the U.S. Department of Commerce is closed,” a notice on the department’s website said. “Commerce Department websites will not be updated until further notice.”

A Commerce Department official said previously that new home sales data scheduled for release on Thursday would be postponed as long as the partial government shutdown continued.

Other data likely to be postponed includes revised figures on U.S. building permits that had been scheduled for Thursday and a report on advance economic indicators, including the goods trade balance, that had been scheduled for Friday.

·         President Donald Trump said on Wednesday he is prepared to wait as long as it takes to get $5 billion from taxpayers for his U.S.-Mexico border wall, a demand that has triggered a partial shutdown of the federal government that is now in its fifth day.

·         Earnings at China’s industrial firms in November dropped for the first time in nearly three years, as slackening external and domestic demand left businesses facing more strain in2019 in a sign of rising risks to the world’s second-largest economy.

Industrial profits fell 1.8 percent in November from a year earlier to 594.8 billion yuan ($86.33 billion), the National Bureau of Statistics (NBS) said on its website on Thursday. It marked the first decline since December 2015.

The fall in profits largely reflected slowing growth in sales and producer prices as well as rising costs, He Ping of the statistics bureau said in a statement accompanying the data.

·         The US economy should continue its strong performance in the first half of 2019. The domestic economy is robust enough, particularly the labor and consumer sectors to roll through June on momentum alone. In the second half of the year the impact of the global economic environment could begin to tell. The US economy can probably weather a serious slowdown in China or an EU recession alone without losing much in GDP expansion, but together they would seriously impact growth.

·         President Donald Trump is considering an executive order to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China's Huawei and ZTE, three sources familiar with the situation told Reuters.

The executive order would direct the Commerce Department to block U.S. companies from buying equipment from foreign telecommunications makers that pose significant national security risks, sources said.

·         Oil fell on Thursday after soaring 8 percent in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices even as a stock market surge offered support.

Brent crude oil futures were down 22 cents, or 0.4 percent, at $54.25 a barrel by 0634 GMT. They rose 8 percent to $54.47 a barrel the day before.

U.S. West Texas Intermediate (WTI) crude futures fell 0.56 percent to $45.96 per barrel. They jumped 8.7 percent to $46.22 per barrel in the previous session.

Reference: Reuters, CNBC,FXStreet