The greenback was supported as U.S. Treasury yields rose on Tuesday to one-week highs in response to the strong domestic data.
The dollar index .DXY was 0.1 percent higher at 103.04. The euro was steady at $1.0459 EUR= and sterling was nearly flat at $1.2273 GBP=D4 after losing 0.25 percent overnight.
Consumer optimism about the economy increased to the highest level since August 2001, according to a monthly survey released Tuesday.
The Consumer Confidence Index hit 113.7 in December, The Conference Board said on Tuesday. Economists polled by Reuters expected the Consumer Confidence Index to hit 109 for the month.
"Consumer Confidence improved further in December, due solely to increasing Expectations which hit a 13-year high (Dec. 2003, 107.4)," Lynn Franco, director of economic indicators at The Conference Board, said in a press release.
"The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices which reached a 13-year high, was most pronounced among older consumers," the director said.
Japan's factory output rose in November and manufacturers expect to ramp up production in coming months, data showed on Wednesday, underscoring the central bank's view that a pick-up in global demand will underpin a steady economic recovery.
The figures reinforce a dominant market view that the Bank of Japan will hold off on expanding monetary stimulus in coming months with a recent rebound in exports seen supporting growth.
Industrial output rose 1.5 percent in November from the previous month, preliminary government data showed, roughly matching a median market forecast for a 1.6 percent increase. It followed a flat reading in October and a 0.6 percent gain in September.
Oil jumped 1.7 percent Tuesday, continuing its year-end rally with support from expectations of tighter supply once the first output cut deal between OPEC and non-OPEC producers in 15 years takes effect on Sunday.
Brent crude was up 87 cents, or 1.6 percent, at $56.03 a barrel by 2:35 p.m. ET (1935). The global benchmark reached $57.89 on Dec. 12, the highest since July 2015.
U.S. West Texas Intermediate crude settled up 88 cents, or 1.7 percent, to $53.90.
Reference: Reuters, CNBC
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