* U.S. dollar retreats after biggest rally in 3 weeks
* BoE minutes seen as relatively dovish; sterling hit
* U.S. CPI up 0.3 percent but core inflation tame
(Updates prices, adds detail)
By Nick Olivari
NEW YORK, Nov 18 (Reuters) - The dollar slid against the
euro on Wednesday after notching its biggest rise in three
weeks on Tuesday, with fresh data doing little to alter the
view that U.S. interest rates will remain at record lows well
into 2010.
Reports showing slightly higher-than-expected U.S.
inflation and a slide in new home construction helped keep euro
gains below $1.50. For more on U.S. data, see [].
Most dealers say the dollar's longer-term declining trend
is intact and noted that although the Federal Reserve may be in
the early stages of withdrawing its huge stimulus measures, it
is still nowhere near raising interest rates from record lows.
On Tuesday, the Fed said it would pare back a discount
window borrowing facility and St. Louis Fed President James
Bullard said on Wednesday that officials will probably adjust
asset-purchase programs before they resort to hiking rates.
"That throws cold water on any lingering thoughts of rate
hikes," said Jacob Oubina, strategist at Forex.com in
Bedminster, New Jersey.
This also offsets comments this week from Fed Chairman Ben
Bernanke, who triggered a dollar rally when he said the Fed --
the U.S. central bank -- was attentive to the dollar's value.
The euro rose 0.6 percent to $1.4949 <EUR=> while against
the yen, the dollar edged up 0.1 percent to 89.38 yen <JPY=>.
Bernanke's rare dollar comments, which were echoed by other
Fed officials and European Central Bank President Jean-Claude
Trichet, had pushed the euro down toward $1.48 on Tuesday.
Earlier reports showing a slight gain in the overall U.S.
Consumer Price Index and a slide in housing starts undercut
some foreign currency gains against the dollar on the view that
a sluggish U.S. economy could undermine global recovery.
But that wasn't enough to change the Fed's outlook.
"We're not worried so much about inflation," said Amelia
Bourdeau, senior strategist at UBS in Stamford, Connecticut.
"Overall, it's still benign because the year-over-year figure
was still negative."
Sterling slipped 0.5 percent to $1.6725 <GBP=> while the
euro was up 1 percent at 89.35 pence <EURGBP=>.
The minutes of the Bank of England's Nov. 4-5 meeting
showed a three-way split, with seven of its nine members voting
to expand the bank's quantitative easing program by 25 billion
pounds to 200 billion.
Perhaps the biggest surprise was discussion on potentially
cutting the rate of remuneration the BoE pays on bank reserves.
This could ease policy by encouraging banks to lend more.
"Any hope for an MPC-related boost to sterling is gone,"
said Daragh Maher, deputy head of FX strategy at Calyon in
London, referring to the Bank of England's Monetary Policy
Committee.
U.S. President Barack Obama wrapped up a visit to China on
Wednesday, although few traders expect any near-term changes in
Beijing's foreign-exchange policy.
(Additional reporting by Steven C. Johnson and Gertrude
Chavez-Dreyfuss in New York and Jamie McGeever in London;
Editing by James Dalgleish)
