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FOREX-Dollar edges higher from 27-month lows as investors await Fed minutes

* U.S. dollar index up 0.1%

* Sterling lower after data shows higher inflation (New throughout, updates prices, market activity, comments to U.S. market open; new byline, changes dateline; previous LONDON)

NEW YORK, Aug 19 (Reuters) - The U.S. dollar crept higher against a basket of currencies on Wednesday, holding a whisker above a 27-month low hit in the previous session as investors awaited the release of minutes from the Federal Reserve’s recent meeting.

The U.S. Federal Reserve’s steps to counter the economic effects of the coronavirus pandemic have helped lift riskier assets to all-time highs even as it has reduced demand for safe-havens, battering the U.S. dollar.

The U.S. Dollar Currency Index was 0.1% higher at 92.321. On Tuesday, the index slipped as low as 92.124, its weakest since May, 2018.

While the dollar was on a somewhat firmer footing on Wednesday, investors were far from rushing to buy the U.S. currency.

“The broader motivation for USD selling remains unchanged,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.

Worries over economic growth as the United States grapples with the pandemic have weighed on the dollar, analysts said.

A Citigroup economic surprise index, which measures the difference in economic data relative to estimates, showed the U.S. recovery has sidelined in recent weeks while its European index remained strong.

Later on Wednesday, investors will get a peek into the U.S. Federal Reserve’s thinking about the state of the U.S. economy when the minutes of the July 28-29 meeting are released.

“Minutes that sound resoundingly dovish and depict a central bank ready to ramp up already aggressive stimulus could keep the dollar biased downward,” Joe Manimbo, senior market analyst at Western Union Business Solutions, said in a note.

Sterling edged lower after data showed British inflation jumped unexpectedly last month to its highest since March.

The Canadian dollar climbed to its strongest level in nearly seven months against its U.S. counterpart helped by firmer appetite for riskier assets after a record run for stocks on Wall Street.

Reporting by Saqib Iqbal Ahmed; Editing by Will Dunham

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