Asia shares crept cautiously higher on Wednesday while a hush settled on the U.S. dollar as investors felt certain the Federal Reserve would raise rates for the first time in a year, but were less sure what it might herald for 2017.

A man looks at an electronic board showing Japan's Nikkei average outside a brokerage in Tokyo, Japan, December 1, 2016.

Australia led the early going with gains of 0.7 percent and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS nudged up 0.2 percent.

Japan's Nikkei .N225 went the other way, easing 0.1 percent with moves across the region modest at best.

The outcome of the Fed's policy meeting will be announced at 1900 GMT, followed by Chair Janet Yellen's news conference half an hour later.

A quarter point move is fully priced in, as are two more hikes next year. Any hint the Fed may move faster than that would likely send the dollar higher and hurt emerging markets.

All eyes are thus on the Fed's economic and rate "dot" plots for a sense of how policymakers think President-elect Donald Trump's policies will impact growth and inflation.

"As most FOMC participants are likely to wait for more specifics on Trump's fiscal policy initiatives before formally altering their forecasts, markets may be disappointed by the lack of additional insight provided," said Michelle Girard, chief U.S. economist at RBSM.

"We expect most participants will continue to see two to three rate hikes as appropriate in 2017."

Treasuries have already moved to price in a rate hike and more, with two-year yields reaching ground last trod in April 2010 at 1.18 percent US2YT=RR.

In contrast, the European Central Bank only last week extended its asset buying campaign and moved to purchase more short-term debt.

A RICH SPREAD

As a result, the spread between U.S. and German two-year yields is now the widest since late 2005, with Treasuries offering a mouth-watering premium of 191 basis points.

The gap kept the euro on the defensive at $1.0625 EUR=, not far from the recent 20-month trough at $1.0505. The dollar was likewise steady on the yen at 115.24 JPY= and against a basket of currencies at 101.060 .DXY.

Speculation that a Trump Administration will implement more debt-financed fiscal stimulus and cut regulation helped all three major U.S. stock indexes to records this week. The Dow ended fewer than 100 points from the magical 20,000 mark.

Bank of America Merrill Lynch's latest survey of investors found expectations of global growth at 19-month highs and inflation at the second highest percentage in 12 years.

Fund managers were the most optimistic about corporate profits in more than six years and allocations to bank stocks surged to an all-time peak.

The Dow .DJI ended Tuesday up 0.58 percent, while the S&P 500 .SPX gained 0.65 percent and the Nasdaq .IXIC 0.95 percent. Tech stocks joined the party as Apple (AAPL.O) climbed 1.7 percent and Amazon (AMZN.O) 1.9 percent.

Bulk commodities from iron ore to coal have also benefited from the reflation trade, combined with signs of stronger growth in China. Again, any hint the Fed might step up the pace of tightening could undo some of those gains.

Oil ran into profit-taking following a reported rise in U.S. crude inventories and an estimate that OPEC may have produced more crude in November than previously thought.

U.S. crude CLc1 futures, which hit a high of $53.41 on Tuesday, were down 73 cents at $52.25 a barrel. Brent crude LCOc1 was quoted down 65 cents at $55.07.

Source: Reuters