* Dollar/yen rises; Aussie, kiwi supported
* Liquidity thin due to holidays (Updates to U.S. afternoon trading)
NEW YORK, Dec 26 (Reuters) - The dollar rose to a near two-week high against the Japanese yen on Thursday as optimism around easing trade tensions between the United States and China sapped demand for safe-haven currencies, even as the holiday-thinned trading limited large moves in the FX market.
Beijing said on Wednesday it is in close touch with Washington on a trade deal signing ceremony, a day after U.S. President Donald Trump said he and Chinese President Xi Jinping will have a ceremony to sign the recently struck agreement.
"Risk is moderately 'on' today on Trump's comment that a trade agreement is 'done,"' said John Doyle, vice president for dealing and trading at Tempus Inc in Washington.
"On a usual day, this might just be a blip, but because of the thin conditions, safe-havens like the JPY are a touch weaker and the New Zealand and Australian dollars are up on hopes of a deal," Doyle said.
Against the Japanese yen, which tends to benefit during geopolitical or financial stress as Japan is the worlds biggest creditor nation, the dollar rose 0.26% to 109.63.
The offshore yuan was near flat on the day against the U.S. currency at 6.9911 yuan per dollar.
Trade-sensitive currencies were stronger. The Australian dollar was 0.38% higher against the greenback, while the New Zealand dollar was up 0.57%.
With global currency markets in holiday mood following Christmas Day on Wednesday and with several centers still closed on Thursday, overall trading activity was subdued.
"Overall, it is so quiet you can hear crickets. Most of the western world remains closed and liquidity is very thin," Doyle said.
The dollar index, which measures the greenback against six other major currencies, was 0.13% lower at 97.523.
Data on Thursday showed the number of Americans filing applications for unemployment benefits fell last week in a sign of ongoing labor market strength.
The Canadian dollar was trading 0.4% higher against the greenback at 1.3104 to the U.S. dollar, or 76.29 U.S. cents. Thursday's rise helped the loonie reclaim ground lost earlier this week after data showed Canada's economy unexpectedly shrank 0.1% in October.
Sterling traded at $1.3004, up a bit from levels before the Christmas holiday though still way below its Dec. 13 peak of $1.3514.
(Reporting by Saqib Iqbal Ahmed; Editing by Steve Orlofsky and Dan Grebler)