U.S. one hundred dollar notes are seen in this picture illustration
U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. Reuters

The dollar moved broadly lower on Tuesday while Australia and New Zealand's currencies jumped as risk appetite grew after China said it will scrap its COVID quarantine rule for inbound travellers - a major step towards easing curbs on its borders.

The New Zealand dollar surged 0.65% to $0.63115 while the Aussie gained 0.25% to $0.67485 in mostly thin trading amid the year-end holiday season. The two currencies are often used as liquid proxies for China's yuan.

China will stop requiring inbound travellers to go into quarantine on arrival starting Jan. 8, the National Health Commission said on Monday, even as COVID cases spike. At the same time, Beijing downgraded the regulations for managing COVID cases to the less strict Category B from the top-level Category A.

"There seems to be no let-up in the pace of relaxing COVID restrictions despite the surge in COVID cases in the mainland," said Christopher Wong, a currency strategist at OCBC. "This perhaps demonstrates Chinese policymakers' resolve to full reopening.

"In addition, there was news of China potentially taking extraordinary measures to support growth," Wong said.

Elsewhere, sterling rose 0.16% to $1.20865, while the euro edged 0.06% higher to $1.06395.

Against a basket of currencies, the U.S. dollar index steadied at 104.12.

Data released on Friday showed that U.S. consumer spending barely rose in November, while inflation cooled further, reinforcing expectations that the Federal Reserve could scale back on its aggressive monetary policy tightening path.

"In line with its seasonal trend, December has been a soft month for the greenback," said ING FX strategist Francesco Pesole.

"It's worth remembering that the dollar rose in each of the past four years in January. Our view for early 2023 is still one of dollar recovery."

The Japanese yen rose 0.1% to 132.75 per dollar, as the recently fragile currency continues to be buoyed by the Bank of Japan's (BOJ) surprise tweak to its yield curve policy last week.

BOJ Governor Haruhiko Kuroda on Monday brushed aside the chance of a near-term exit from ultra-loose monetary policy, even as markets and policymakers are signalling an increasing focus on what comes after Kuroda's tenure ends in April next year.

"While ... (the) policy tweak has added uncertainty to the BOJ outlook, we continue to lean toward BOJ policymakers making no further policy adjustments through the end of 2023," said analysts at Wells Fargo.

"Inflation pressures are expected to ease, which should lessen the BOJ's motivation for further policy moves."

In cryptocurrencies, crypto lender Vauld has called off its potential acquisition by rival Nexo, according to a CoinDesk report.

Bitcoin was last marginally lower at $16,914, while Ether slipped 0.1% to $1,227.