The U.S. dollar hit a 14-month low on Tuesday as investors refocused on the outlook for U.S. interest rates and whether the U.S. government really wants a strong currency. Higher rates make U.S. assets more attractive and bolster demand for the dollars to buy them. Expectations of a strengthening global recovery outside the U.S. added to rising demand for growth- and commodity-linked currencies like the Australian and Canadian dollars at the expense of demand for the greenback. "The dollar is under pressure because interest rates here are the lowest in the western world and will remain low for the foreseeable future," said John McCarthy, director of foreign exchange at ING Capital Markets in New York. The U.S. Federal Reserve will release minutes of their September policy meeting on Wednesday and investors will closely scrutinize the text for any clues as to when the central bank will tighten the benchmark interest rate and reduce stimulus. But for now, with rates close to zero, investors are focused on the fact that while the U.S. government pays lip service to a strong dollar policy, there is little action beyond words. "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," McCarthy said. The dollar index, a measure of the greenback's value against six currencies, was down 0.3 percent at 75.907 .DXY after hitting 75.738 .DXY, its lowest since early August last year. The euro rose to its highest against the dollar since late August, 2008 as dollar-selling gained momentum, helping push it past option expiries at $1.4850. It last traded at $1.4836. While the dollar gained, particularly against the yen, after Federal Reserve Chairman Ben Bernanke said last Thursday the U.S. central bank stood ready to tighten monetary policy once economic recovery took hold, investors now consider that the time frame for action may be open ended. The U.S. currency was last down 0.2 percent at 89.69 yen, having earlier traded above 90 yen. Fed Vice Chairman Donald Kohn and New York Fed president William Dudley are set to speak later in the day but investors are not betting there will be any new statement on the economy or interest rates. NO SAFE HAVEN Expectations for economic growth elsewhere in the world have also reduced demand for the dollar as a safe haven currency with record gold and higher oil prices one indication of higher risk tolerance. The dollar and commodities are often inversely correlated, with gold and oil priced in dollars and seen as an alternative currency and hard asset themselves.

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