Share markets from Australia to Japan staged a relief rally on Thursday as President Barack Obama declared a deal had been done to lift the government's borrowing limit and avoid a historic default.
U.S. Senate leaders hammered out an agreement to break the fiscal impasse late on Wednesday, paving the way for U.S. lawmakers to end the drama in Washington just hours before the government exhausts its borrowing authority.
The Senate has passed the deal and sent the measure to the House of Representatives for final passage, before Obama signs it into law.
The dollar index, which tracks the greenback's performance against a currency basket, was steady at 80.525, having reached a one-month high of 80.745 overnight.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent in early trade, nearing a five-month peak scaled earlier in the week. Tokyo's Nikkei advanced 1.2 percent.
Wall Street closed more than 1 percent higher, bringing the S&P 500 index within striking distance of a record high set last month.
The deal, however, does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. It funds the government until January 15 and raises the debt limit through to February 7, so global markets face the possibility of another showdown in Washington early next year.
"The can has been kicked further down the road...the reset button has been pushed and we will go thought this all again in two months time," said Evan Lucas, market strategist at IG in Melbourne.
But Lucas expected "normal trading" to return over the coming days as the earnings season kicks into gear.
Growing optimism of an imminent breakthrough couldn't have come at a better time for companies including Malaysia's UMW Oil & Gas, South Korea's Hyundai Rotem and the Philippines' Travellers International, which plan to raise about $1.7 billion in the IPO market. The deals are expected to be priced on Thursday.
In the currency market, the improved risk appetite saw investors favour high-yielding currencies including the Australian dollar.
The Aussie dollar hit a 4-month high of $0.9574 and scaled a 4-1/2 month peak of 94.48 yen.
Against the yen, the U.S. dollar reached a three-week high of 99.01, while the euro slipped 0.1 percent to $1.3521.
Among commodities, copper rose 0.3 percent to $7,283 a tonne, while safe-haven gold traded at $1,284 an ounce struggling to gain momentum in the absence of safety bids. U.S. crude was a touch softer at $102.16 a barrel.
Many traders are already trying to get past the fiscal drama and looking to see when a backlog of U.S. economic data including the September payrolls will be released once the partial government shutdown is lifted.
Once the manoeuvring in Washington is over, investors will likely re-focus on the economic releases and the timeline for the U.S. Federal Reserve's tapering of its bond-buying programme - a major driver of global assets in recent months.
The Fed stunned markets last month by opting to delay the start of the stimulus reduction.