European markets closed lower despite an uptick in inflation figures on Wednesday afternoon.
Stocks rose on Tuesday, the first trading day of 2017, but closed off their session highs as oil prices gave back initial gains.
Investors were cautious about increasing bets on the greenback before getting fresh clues on the U.S. economy.
Oil prices recovered after a sharp decline in the previous session on expectations US crude stockpiles are falling.
Gold touched a near-four week high on Wednesday as the dollar edged back from a 14-year peak.
Japanese shares jumped more than 2 percent on Wednesday as recent surveys suggest global manufacturing sectors might be seeing a strong turnaround.
U.S. stock index futures pointed to a higher open on Wednesday as traders digested a bullish start to the year.
U.S. government debt prices were lower on Tuesday as investors parsed through key data reports on the first trading day of the year.
European markets closed higher on Tuesday following good figures from China and Europe.
Dealers and investors in London returned to push the greenback to within 1 percent of December's long-term highs.
Oil prices fell as the U.S. dollar strengthened, making greenback-denominated commodities like crude more expensive to some buyers.
Gold erased earlier losses to trade sharply higher on Tuesday, shrugging off the dollar's buoyant start to the new year.
U.S. stock index futures pointed to a higher open on Tuesday as traders eyed key data releases on the first trading day of 2017.
Asian markets gained on Tuesday, after China's Caixin PMI for December came in stronger than expected.
European markets started the new year on a negative footing but have reversed losses during mid-morning trading.
U.S. stocks ended the year with three straight days of losses for the first time since Nov. 4.
U.S. government debt prices were lower on Friday, as investors geared up a new trading year, set to get into full swing next week.
The dollar recovered from a two-week low against a basket of six major currencies.
This comes on the back of an agreement struck between OPEC and non-OPEC countries to cut crude production output.
Gold was set to close 2016 up more than 9 percent for its first annual gain in four years, edging higher on the back of a weaker dollar.