* Dollar index falls to 14-month low
* Canada dollar nears parity, hits 14-month high
* Gold hits record highs; euro hits pre-Lehman high
(Recasts, updates prices, adds quote, detail, changes byline)
By Steven C. Johnson
NEW YORK, Oct 13 (Reuters) - The dollar fell to a 14-month
low on Tuesday, with investors betting the United States is
likely to bring up the rear in a global economic recovery led
by Asia and commodity-producing countries.
The euro rose to near $1.49, its highest level since August
2008, before the demise of Lehman Brothers pushed the world
economy to the edge of collapse and sparked a frenzy of dollar
buying by investors eager to dump riskier currencies.
Hopes for a stronger recovery outside the United States
lifted oil to a seven-week high <CLc1> and pushed gold to a
fresh record peak, while demand for commodity-linked currencies
such as the Canadian dollar and Brazilian real remained high.
Investors fear a weak U.S. labor market and a protracted
recovery will keep interest rates near zero well into 2010.
That makes holding low-yield dollars unattractive, and any
appeal the greenback has would be dulled further if other major
central banks start lifting interest rates as growth picks up.
Federal Reserve Vice Chairman Donald Kohn bolstered that
view on Tuesday, saying a tepid U.S. recovery meant rising
inflation is not an imminent threat. []
"People are optimistic about global growth in the fourth
quarter and beyond, so money is coming out of the U.S. and the
dollar has gone south against most majors, especially commodity
currencies," said Hidetoshi Yanagihara, senior currency trader
at Mizuho Corporate Bank in New York. "That should continue for
awhile, especially if the Fed keeps rates where they are."
The euro was last up 0.3 percent to $1.4815 <EUR=> after
earlier hitting $1.4876, its highest since late August, 2008.
Sterling rose 0.6 percent to $1.5885 <GBP=> while the dollar
edged up 0.1 percent to 89.90 yen <JPY=>.
The dollar hit a 14-month low against its Canadian
counterpart at C$1.0268 <CAD=> before recovering to C$1.0355,
steady with Monday's closing level.
An index that measures the dollar against a basket of six
major currencies earlier touched its lowest level in 14 months
and was last down 0.2 percent at 75.980 <.DXY>.
Big corporate names due to post earnings this week include
JP Morgan Chase & Co <JPM.N> on Wednesday, and Goldman Sachs
Group Inc <GS.N> and International Business Machines Corp
<IBM.N> on Thursday. [] [].
Strong results could further whet investors' risk appetite,
adding to dollar weakness.
The Fed will release minutes from its September policy
meeting on Wednesday, and investors will scrutinize the text
for clues on when the central bank will tighten the benchmark
interest rate or start winding down a stimulus program that's
pumped trillions into the economy.
Many investors, though, expect the U.S. government to do
little to support the dollar other than issue from time to time
its oft-repeated "strong dollar" mantra, as a softer currency
should aid the weak economy and boost export revenues.
"The (U.S.) administration is quiet and says nothing about
it, so people feel they don't desire to make any type of
external stand on the dollar," said John McCarthy, director of
foreign exchange at ING Capital Markets in New York.
(Additional reporting by Nick Olivari, Editing by Chizu
Nomiyama)
