FOREX-Central bank rate bets send dollar, sterling lower

(Updates prices, adds analyst comment, adds FX table) * Fed seen raising rates by 25 bps on Wednesday - IRPR * SNB expected to hike rates by 50 bps on Thursday - Reuters poll * Markets split on 25 bps or no hike for BoE on Thursday - IRPR * Norges Bank seen hiking by 25 bps on Thursday - Reuters poll By Hannah Lang and Joice Alves WASHINGTON/LONDON, March 21 (Reuters) - The dollar fell and sterling steadied on Tuesday as traders reckoned banking stress could keep the Federal Reserve and the Bank of England from hiking rates much further, or at all, later in the week. Investors' focus has moved to a slew of central bank meetings due this week after days of volatility in markets caused by worries over the stability of the global banking sector. The dollar index, fell 0.232% to 103.090, while sterling edged 0.34% lower to $1.2234. Markets are pricing in a 85% chance of a 25-bp hike when the Fed announces its monetary policy decision on Wednesday. The Fed hikes' peak was seen at 5.5% only a few weeks ago, against about 4.8% now. The dollar has followed those expectations lower, though general nervousness in financial markets has tempered selling. Sentiment is fragile as investors are concerned over the outlook for the banking sector after U.S. lender First Republic shares tumbled nearly 50% on Monday on fears it will need a second rescue. "(The Fed) should signal that inflation is still the focus here, but obviously properly address what has been done, and highlight what they can do to further prevent any further contagion beyond First Republic," said Edward Moya, senior market analyst at OANDA. Sterling moved a tad lower, staying close to an almost seven-week high against the dollar, after data showed Britain recorded a budget deficit of 16.68 billion pounds ($20.4 billion) in February, far above expectations in a Reuters poll. "Volatility in rates and the broader asset markets has been extraordinary recently," said John Velis, FX and macro strategist for the Americas at BNY Mellon, causing a "substantial repricing" of future rate hikes. Norway's central bank Norges Bank is expected to raise its benchmark interest rate by 25 bps to 3% this week to curb inflation and prop up a weakening currency, according to a Reuters poll. The Norwegian crown last fell 1.4% against the dollar at 10.500. On Tuesday, minutes showing Australia's central bank had agreed on March 7 to consider the case for a rate pause at its April policy meeting, even before the recent bout of volatility weighed on the Aussie, which fell 0.64% versus the greenback at $0.668. The euro last rose 0.52% to $1.0775. In cryptocurrencies, bitcoin last rose 0.07% to $28,098.00 after hitting a nine-month high on Monday. The world's largest cryptocurrency rose 26% last week, its best weekly gain since April 2019. ======================================================== Currency bid prices at 10:03AM (1403 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 103.0800 103.3400 -0.23% -0.396% +103.5100 +102.9900 Euro/Dollar $1.0777 $1.0723 +0.50% +0.57% +$1.0789 +$1.0704 Dollar/Yen 132.2800 131.3100 +0.75% +0.91% +132.4450 +131.0500 Euro/Yen 142.54 140.82 +1.22% +1.60% +142.7900 +140.4300 Dollar/Swiss 0.9237 0.9293 -0.58% -0.08% +0.9316 +0.9234 Sterling/Dollar $1.2236 $1.2277 -0.33% +1.18% +$1.2282 +$1.2225 Dollar/Canadian 1.3676 1.3665 +0.08% +0.94% +1.3698 +1.3644 Aussie/Dollar $0.6675 $0.6718 -0.62% -2.05% +$0.6726 +$0.6672 Euro/Swiss 0.9954 0.9962 -0.08% +0.60% +0.9978 +0.9950 Euro/Sterling 0.8805 0.8731 +0.85% -0.44% +0.8816 +0.8731 NZ $0.6188 $0.6247 -0.94% -2.54% +$0.6248 +$0.6183 Dollar/Dollar Dollar/Norway 10.5040 10.6490 -1.40% +6.99% +10.6940 +10.4740 Euro/Norway 11.3219 11.4106 -0.78% +7.89% +11.4537 +11.2877 Dollar/Sweden 10.2963 10.3670 -0.19% -1.07% +10.4084 +10.2807 Euro/Sweden 11.0968 11.1183 -0.19% -0.47% +11.1429 +11.0832 (Reporting by Hannah Lang in Washington and Joice Alves in London; Editing by Christina Fincher, William Maclean and Alison Williams)