* Investors narrow odds on Fed rate cut by year end
* Dollar nears two-week low but losses limited
* Norwegian crown in focus with Norges rate hike expected
* Graphic: World FX rates in 2019
By Tommy Wilkes
LONDON, March 21 (Reuters) - The Federal Reserve's dovish
confirmation fired up a rally in the euro, yen and Australian dollar
overnight and into Thursday, with the greenback near two-week lows as
investors began to price in a U.S. interest rate cut for later this
Norway's crown was slightly firmer ahead of a Norges central
bank decision at which policymakers are expected to hike rates 25
basis points to 1 percent.
The Fed on Wednesday all but abandoned plans to raise rates this
year - a signal its three-year campaign to normalise policy might be
at an end.
Investors rushed to price in the prospect of rate cuts later this
year, while benchmark Treasury yields dived to their lowest since
The euro rose to as high as $1.1437 and $1.1448 overnight, its
strongest since early February. It was down slightly as London trading
got underway but held above $1.14.
The dollar slid to 110.47 yen <JPY=, with its 0.6 percent loss
overnight the biggest drop since the flash crash of early January. It
later settled at 110.36.
Against a basket of currencies, the dollar index hit its weakest
since early February overnight before recovering slightly to
96.019, up 0.3 percent on the day.
Currencies that tend to perform well when risk appetite is strong
also rose. The Australian dollar gained 0.4 percent to $0.7150 .
"The Fed delivered a surprisingly dovish message," said
MUFG analysts in a note. "The downward pressure on US yields
continues to support our outlook for a weaker US dollar this year."
Sterling edged lower as investors fretted a no-deal Brexit next
week was still a possibility, after the European Union made a delay to
Britain's departure contingent on Prime Minister Theresa May getting
her withdrawal deal passed by parliament.
May lost the first two attempts to pass her deal. Sterling was 0.2
percent lower at $1.3165 .
Emerging market currencies fared far better from the Fed's dovish
confirmation. MSCI's emerging currency index hit its highest level
since last June.
The only solace for the dollar was that other central banks around
the globe have also turned decidedly dovish in recent months as growth
slowed pretty much everywhere.
That need for stimulus means many central banks will not want to
see their currencies appreciate against the dollar, giving them reason
to sound ever more accommodative.
CBA senior currency strategist Joseph Capurso said "similarly
soft economic growth outlooks elsewhere, including Europe, China,
Australia and Japan" meant that it was questionable whether the
dollar would depreciate significantly.
(Additional reporting by Wayne Cole in Sydney Editing by Raissa Kasolowsky)