* 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
(Recasts after Norges bank decision)
By Tommy Wilkes
LONDON, March 21 (Reuters) - Norway's crown surged on Thursday
after the central bank raised interest rates and signalled more
tightening would come as the domestic economy strengthened.
The relatively hawkish stance, which was expected, contrasted with
the dovish shift undertaken by most central banks, including the
European Central Bank.
The crown rose more than 1 percent to 9.5910 against the euro, its
strongest since November and headed for its biggest one-day rise since
December 2017 .
The Norges Bank raised rates to 1 percent from 0.75 percent and
raised its policy rate forecasts out to 2021. It said the strength in
the domestic economy suggested more tightening would be necessary
later in 2019 .
"What is the most surprising is that they are already
signalling another rate hike in the next six months," said Niels
Christensen, an analyst at Nordea.
Elsewhere, the Swiss National Bank lowered its inflation forecast
as it stuck to its ultra-easy monetary policy. The franc was unchanged CHF=EBS>.
A rally in the euro, yen and Australian dollar, after the Federal
Reserve all but abandoned plans to raise rates this year
dovish confirmation, fizzled out, with the greenback off two-week lows.
Investors had rushed to price in the prospect of rate cuts later
this year after the Fed's move. Benchmark Treasury yields dived to
their lowest since early 2018.
The euro rose to as high as $1.1448 overnight, its strongest
since early February. It was down 0.1 percent at $1.1403 at 0935 GMT.
The dollar settled at 110.425 yen per dollar , down 0.2 percent
against the Japanese currency.
Against a basket of currencies, the dollar index fell to its
weakest since early February overnight before recovering to 96.044,
up 0.3 percent on the day.
"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 slipped to $1.3172 amid concern a no-deal Brexit next
week was still a possibility. The European Union said delaying
Britain's departure was contingent on Prime Minister Theresa May
getting her withdrawal agreement approved by parliament. She lost two
Emerging-market currencies strengthened after the Fed's meeting.
MSCI's emerging currency index rose to its highest since last June.
(Editing by Raissa Kasolowsky)