By William L. Watts The U.S. dollar tumbled versus the British pound but held steady versus the euro and gained ground on the Japanese yen ahead of the release of the Federal Reserve's closely-watched summary of anecdotal reports on the U.S. economy. The dollar index (DXY), a measure of the greenback against a trade-weighted basket of currencies, traded at 75.477, down slightly from 75.556 in North American activity late Monday. Weaker equity markets across the board have subsequently reined in risk appetite, keeping the euro out of reach of the psychologically important $1.50 level for now, said Jane Foley, research director at Forex.com. The euro traded at $1.4911 versus the U.S. dollar, erasing earlier gains and falling slightly from $1.4931 late Tuesday. Earlier, talk that China's industrial-production data due for release Thursday will exceed market consensus had boosted so-called risk-oriented currencies, such as the New Zealand and Australian dollars, in Asian activity, said Boris Schlossberg, director of currency research at GFT. "China remains the absolute key to the recovery trade as it has now becomes the locomotive for global growth. ... If Chinese data does surprise to the upside it could prove to be the catalyst for further gains" by "high-beta" currencies, Schlossberg wrote, referring to currencies that tend to have high volatility and therefore carry high risk. The U.S. dollar remained 0.3% lower versus the New Zealand dollar at NZ$1.3293 in recent action. The Australian dollar was 0.2% lower versus the U.S. unit at 92.15 U.S. cents. The New Zealand dollar, known as the kiwi, was aided by remarks by Reserve Bank of New Zealand Governor Alan Bollard, who said the currency's strength wasn't necessarily an impediment to raising interest rates to cap house prices, according to local radio. The British pound was the star performer, extending strong gains versus the U.S. dollar and the euro. Minutes from the Bank of England's Oct. 8 Monetary Policy Committee meeting confirmed there were no divisions on the nine-member panel over the decision to leave the BoE's 175 billion pound asset-purchase plan unchanged until at least next month. The pound jumped to its highest level versus the U.S. dollar in more than a month and traded recently at $1.6570. The euro fell 1.1% to 90.12 pence. Strong September U.K. retail-sales data on Thursday could set the stage for a further push toward $1.66, said Kenneth Broux, market economist at Lloyds TSB. Third-quarter gross-domestic-product data due on Friday is expected to show the British economy returned to growth, albeit at a meager pace. Economists surveyed by Dow Jones Newswires expect the data to show a 0.1% rise. Broux sees the prospect for some profit-taking around the GDP data, but said a stronger-than-expected rise could provide fuel for a test of the recent high at $1.6742. Schlossberg said the MPC minutes "proved to be far less dovish that the market feared." "Although the U.K. monetary authorities voted 9-0 for keeping quantitative easing at 175 billion pounds, there was little indication that the members were willing to expand the program further," he wrote. The release of the Fed's beige book at 2 p.m. Eastern Time and speeches by Fed officials, including Richmond Fed President Jeffrey Lacker and Fed Gov. Daniel Tarullo, could provide the dollar with some fresh direction later in the session, she said. The dollar rebounded versus the Japanese currency to trade at 90.99 yen, up from 90.81 yen in late North American trading Tuesday. The dollar remained firm against its Canadian counterpart, buying 1.0581 Canadian dollars, compared with C$1.0487 late Tuesday. On Tuesday, the Canadian dollar dropped versus its U.S. counterpart after the Bank of Canada maintained its overnight rate target at 0.25% and reiterated a conditional commitment to hold the current policy rate until the end of the second quarter of 2010, as analysts largely expected. Policy makers also said "heightened volatility and persistent strength in the Canadian dollar are working to slow growth and subdue inflation pressures." Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=FqNTrh%2BUclAcz4IyKu79dg%3D%3D. You can use this link on the day this article is published and the following day.

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