(Updates prices, adds comment)
    By Amanda Cooper
       LONDON, March 22 (Reuters) - The dollar hovered around
five-week lows on Wednesday, before the conclusion of the
Federal Reserve's policy meeting at which investors will be
looking for any insight on what might happen with interest rates
given the turmoil in the banking sector. 
    Markets show a quarter-point rise in U.S. rates is the most
likely outcome, but investors will be keen to hear what Chair
Jerome Powell says about the crisis that has rattled global
banks this month and how carefully the central bank feels it
needs to tread.
    "Today's rate hike is priced in and expected and there would
be no reason to not do it," Fiona Cincotta, a strategist with
City Index, said.
    The Fed, together with other major central banks, has made
provisions to grease the wheels of the financial system, after
the failure of several smaller U.S. lenders and the implosion of
Credit Suisse  CSGN.S  at the weekend unleashed huge market
volatility and a rout in banking stocks and bonds in particular.
    Following Credit Suisse's shotgun takeover by UBS  UBSG.S ,
and U.S. authorities and large banks helping prop up some of the
more vulnerable regional institutions, investors are breathing a
little more easily, leading to the dollar losing some of its
safe-haven appeal this week.
    The Fed meeting concludes on Wednesday with the 2 p.m. EDT
(1800 GMT) release of a policy statement followed half an hour
later by a news conference by Powell.
    Christopher Wong, currency strategist at OCBC, said the
focus will be on how the Fed communicates its forward guidance,
in particular "the higher for longer" rhetoric.
    "Ideally, we would like the Fed to go with a 25 basis point
hike this meeting, tone down hawkish guidance and emphasize that
policy decisions at subsequent meetings will continue to be
data-dependent," Wong said. "This wish list should see dollar
trade on the softer profile and risk proxies trade steadily".  
    The pound  GBP=D3  was the strongest performing G10 currency
of the day, with a 0.5% gain versus the dollar to trade at
$1.2279 after data showed UK inflation came in much hotter than
expected in February, which puts Bank of England policymakers in
a tough position when they meet on Thursday.
    "I expect the bank to hike 25 bps tomorrow, but you could
argue that it makes sense to be cautious and hold off from
tightening while monitoring developments in the financial
sector," Colin Asher, senior economist at Mizuho Bank, said.
    Markets show traders now fully expect a rise of 25 basis
points, whereas just 24 hours ago, the chances of the bank
raising by a quarter of a point or standing pat were 50/50. 
    "There had been a 50/50 feeling about would they hike or
would they not and that print today has cemented the fact that
they do need to hike tomorrow. But I don't think they will
necessarily be talking about future hikes again," City Index's
Cincotta said.
    The euro was last down 0.3% against sterling  EURGBP=D3  at
87.81 pence, while gaining 0.2% against the dollar  EUR=EBS  to
trade at $1.0795.
    Meanwhile, the dollar rose 0.4% against the yen  JPY=EBS  to
132.98, while the Australian dollar  AUD=D3  rose 0.3% to
$0.6688, as did the kiwi  NZD=D3 , which rose to $0.621.
    In cryptocurrencies, bitcoin  BTC=BTSP  was last up 0.3% at
$28,274, but below Monday's nine-month peak.  

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates    https://tmsnrt.rs/2RBWI5E
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Additional reporting by Lucy Raitano in London and Ankur
Banerjee in Singapore; Editing by Emelia Sithole-Matarise and
Raissa Kasolowsky)
 ((ankur.banerjee@thomsonreuters.com;; Mobile - +65 8121 3925;
Twitter: @AnkurBanerjee17;))