SINGAPORE, Oct 20 (Reuters) - The US dollar churned at the start of trading in Asia on Tuesday as a tepid recovery in investor confidence bolstered higher-yielding currencies, but growing political risk in Europe continued to test traders' nerves.
The euro was steady at $1.1216, while the British pound rose 0.1% to $1.3308. The Australian dollar was up 0.1% at $0.6986, while its New Zealand counterpart nudged 0.1% higher to $0.5668.
Against the yen, the US dollar was flat at 158.56 yen ahead of an auction of 20-year Japanese government bonds.
"FX markets reflected the improvement in risk appetite, with higher-carry currencies finding buyers," said Chris Weston, head of research at Pepperstone Group in Melbourne.
"Europe was less convincing," Weston said. "French sovereign risk is clearly being priced into European equities, but the euro's resilience suggests traders aren't yet treating it as a systemic European problem."