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The U.S. dollar was steady on Wednesday as investors tempered their risk appetites ahead of the release of minutes of the Federal Reserve's policy meeting that could offer clues on the outlook for inflation and interest rates.

The Fed on Wednesday will release the minutes from its most recent meeting, with investors looking for any sign of discussions around moderating the pace of interest rate hikes.

The dollar index, which measures the greenback against six major peers, was last up 0.056% at 107.130, having slipped 0.65% overnight.

The overnight move reflected better risk sentiment as stocks and bonds rallied on the back of better corporate earnings and expectations of slower rate hikes from the Fed, said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

Fed Chair Jerome Powell said this month that, while borrowing costs would need to rise further, the central bank might raise interest rates in smaller increments in the future.

New Zealand's central bank raised interest rates by 75 basis points to a near 14-year high of 4.25% on Wednesday.

The central bank said the cash rate needed to reach a higher level earlier than previously indicated to tame inflation. It also increased the projected peak for the cash rate to 5.5% in September 2023.

The kiwi rose 0.57% to $0.618, while the Australian dollar was up 0.06% at $0.665.

Meanwhile, China tightened restrictions in some cities due to a spike in COVID-19 cases. The city of Chengdu will conduct mass testing for residents for five straight days.

"The imposition of new restriction near term undoubtedly will have a negative economic impact, but at least for now the market seem to focus on the fact that over the medium-term China is looking to gradually move towards a strategy of living with COVID," said Rodrigo Catril, a currency strategist at National Australia Bank.

"That said, we think that setbacks are very likely in this process, thus we should expect spikes in market volatility along the way."

The euro was up 0.03% at $1.0305, after gaining 0.6% overnight, while sterling was last trading at $1.1888, up 0.04% on the day.

Cryptocurrencies remained volatile, with bitcoin swinging between losses and gains. It was last down 0.21% at $16,163.

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Currency bid prices at 0123 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.0303 $1.0303 +0.01% -9.36% +1.0321 +1.0301

Dollar/Yen 141.3200 141.2250 -0.05% +22.72% +141.3300 +140.9800

Euro/Yen 145.62 145.50 +0.08% +11.74% +145.6300 +145.4100

Dollar/Swiss 0.9516 0.9515 +0.01% +4.32% +0.9520 +0.9507

Sterling/Dollar 1.1882 1.1886 +0.05% -12.07% +1.1908 +1.1892

Dollar/Canadian 1.3374 1.3373 -0.02% +5.75% +1.3375 +1.3357

Aussie/Dollar 0.6643 0.6650 -0.10% -8.61% +0.6659 +0.6642

NZ 0.6171 0.6155 +0.28% -9.83% +0.6193 +0.6121

Dollar/Dollar