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Dollar Flat vs Euro as FOMC Minutes Seen Dovish

The dollar erased gains against the euro to trade flat Wednesday after minutes of the Federal Reserve's January monetary policy meeting warned of more risks to the U.S. economic growth outlook.

The euro was flat at $1.4720 after dipping to a session low of $1.4615, according to Reuters data. Against the yen the dollar was up 0.3 percent at 108.17 yen, off its session high of 108.36.

Earlier, the dollar rose after a government report showedU.S. inflation climbed higher in January. That report cast doubt over expectations that the Fed would cut interest rates aggressively at their next policy meeting.

The Fed was expected to slash benchmark overnight U.S. rates by another half percentage point from the current 3.0 percent next month, but this data could complicate the central bank's rate-cutting campaign as the U.S. economy slows down.

Data showed that the consumer price index, the most broadly used gauge of inflation, advanced 4.3 percent in the 12 months through January due to higher food prices. Core prices, which exclude food and energy costs, also gained, rising 0.3 percent in January, the strongest monthly increase since June 2006, after gaining 0.2 percent in December.

U.S. housing data were mixed. Starts rose to a 1.012 million annual rate, but it was only a slight rebound from the revised 1.004 million pace in December, which was the lowest pace for starts since May 1991.

Permits slipped to a 1.048 million annual rate, the weakest showing since 984,000 in November 1991. Permits to build are an indicator of builder confidence in future housing activity.

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