* Dollar index at 14-month low
* Canada dlr, Aussie dlr hit 14-month highs
* Gold hits record highs; oil up 1 pct
* Sterling down vs euro on weaker UK inflation data (Recasts, updates prices)
By Nick Olivari
NEW YORK, Oct 13 (Reuters) - The U.S. dollar touched a 14-month low against a basket of currencies on Tuesday as investors refocused on the outlook for U.S. interest rates.
Expectations of a strengthening global recovery outside the United States added to rising demand for growth-linked and commodity-linked currencies like the Australian and Canadian dollars at the expense of greenback demand.
Higher rates would make U.S. assets more attractive and bolster demand for dollars.
"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 clues on when the central bank will tighten the benchmark interest rate and reduce its stimulus program.
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 0.1 percent at 76.061 after hitting 75.738, 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 $1.4802, up 0.2 percent from the prior close.
The dollar had gained, especially 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. But investors now consider that the time frame may be open-ended.
The U.S. currency was last down 0.1 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 don't expect 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 prices and higher oil prices indications 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 a hard asset. Gold prices hit record highs on Tuesday, while oil gained 1 percent and rose for the fourth straight session.
The euro rose to a six-and-a-half-month high against the sterling after the release of unexpectedly soft UK inflation data, even as sterling managed a 0.3 percent rise against the dollar to $1.5842.
Expectations of continued earnings improvements also kept investors focused on so-called riskier assets to the detriment of the yen and the dollar.
"Risk perception remains an important topic in the absence of a cyclical trend out of the United States," said Michael Klawitter, currency strategist at Commerzbank in Frankfurt.
"But I wouldn't expect any serious impact on the risk perception picture when liquidity remains very ample. So in this environment, commodity currencies should continue to outperform."
Big corporate names due to post earnings this week include JP Morgan Chase & Co on Wednesday, and Goldman Sachs Group Inc and International Business Machines Corp on Thursday.