By Saqib Iqbal Ahmed
NEW YORK (Reuters) - The dollar retreated across the board on Tuesday, ceding some of the ground gained in the previous session, as investors looked past worries about China's COVID flare-ups, boosting demand for more risky currencies.
Equities, commodities and riskier currencies were largely firmer on Tuesday, a day after fresh COVID-19 curbs in China fuelled worries over the global economic outlook.
The euro rose 0.5% against the dollar to $1.02965, on pace to snap a three-session streak of losses.
"The tentative recovery in risk appetite has been enough to stall the dollar’s several-day rebound," said Joe Manimbo, senior market analyst at Convera in Washington.
"Fed minutes loom tomorrow but for the most part range trading is dominating ahead of the U.S. holiday," Manimbo said, referring to the Thanksgiving holiday on Thursday.
The dollar has rallied against every major currency this year, boosted by the Federal Reserve's supersized interest rate hikes as it battles inflation. But recent cooler-than-expected U.S. consumer price data has spurred investors' hopes that the Fed may be in a position to moderate its pace of hikes.
Federal Reserve Bank of Cleveland President Loretta Mester reiterated Tuesday that getting inflation down remains critical for the central bank.
Investors will be parsing minutes from the Fed's November meeting, due on Wednesday, for any hints about the outlook for interest rates.
"The Fed’s hawkish outlook is keeping a floor under the dollar but expectations of a slower pace of tightening is capping rallies," Convera's Manimbo said.
Tuesday's revival in risk appetite helped lift the Australian dollar 0.6%, while the New Zealand dollar rose 0.9% as traders braced for New Zealand's central bank to deliver its biggest ever rate hike this week as it continues efforts to temper inflation.
Sterling was 0.6% higher at $1.1885 after data showed Britain's government borrowed less than expected in October, although the budget deficit is likely to balloon in the months ahead thanks to energy bill support measures and a slowing economy.
In cryptocurrencies, bitcoin was 2.5% higher at $16,161, a day after falling to a new two-year low of $15,479 amid jitters about the health of crypto broker Genesis.
Genesis said on Monday it has no plans to file for bankruptcy imminently, though Bloomberg News reported, citing sources, that the broker was struggling to raise fresh cash for its lending unit, and warning investors it may need to file for bankruptcy if it does not find funding.
The lending unit suspended redemptions last week, citing fallout from the collapse of FTX, which filed for bankruptcy on Nov. 11.