Dec 18 (Reuters) - A look at the day ahead in Asian

markets.

Investors in Asia on Wednesday enter a crucial 24-hour period in

a cautious mood, with stocks in the red and risk appetite

subdued ahead of the Fed's interest rate decision later in the

day and the Bank of Japan's closer call the following day.

Before these two blockbuster calls, the central banks of

Thailand and Indonesia also deliver their latest policy

decisions - both are expected to keep interest rates on hold at

2.25% and 6.00%, respectively.

The 'risk off' tone for Asia on Wednesday was set by global

market moves on Tuesday - world stocks and Wall Street posted

chunky losses, the dollar held its ground, and the 10-year U.S.

Treasury yield hit a one-month high of 4.44% before easing back.

World stocks hit a two-week low on Tuesday, Wall Street's

big three indices lost between 0.3% and 0.6%, and the Dow

clocked up its ninth consecutive daily loss. Remarkably, that is

its longest losing streak since 1978.

Surprisingly strong U.S. retail sales figures didn't derail

near-certain expectations of a quarter-point U.S. rate cut on

Wednesday. But it's another solid top-tier economic indicator

that will strengthen the perception of 'U.S. exceptionalism' and

a relatively hawkish Fed going into next year.

Indeed, assuming the Fed cuts rates by 25 basis points on

Wednesday, another quarter-point move isn't fully priced into

rates futures markets until June. The 2025 curve barely implies

50 bps of easing all year.

This is helping support the dollar and Treasury yields, a

sentiment-sapping combination at the best of times for emerging

markets, never mind with so many central bank decisions on the

immediate horizon.

Emerging markets will also be sensitive to the rising 'term

premium' on 10-year U.S. Treasuries - essentially the risk

premium investors demand for lending long to Uncle Sam rather

than rolling over shorter-term debt - which is close to making

new highs for the year.

The dollar is holding up well generally but probably

performing better against Asian and emerging currencies - the

Brazilian real sank to a new low on Tuesday, India's rupee

touched another record low, while the Thai baht and Indonesian

rupiah were also on the back foot ahead of their respective

central bank decisions.

All this points to a fairly subdued day for risk assets in

Asia Wednesday. In currencies, the yen is advancing across the

board ahead of the BOJ decision on Thursday. Could Governor

Kazuo Ueda and colleagues hike rates by 10 bps? Japanese swaps

market pricing is split almost 50-50 on this right now.

Japanese stocks, meanwhile, are expected to open in the red

but a burst of potential M&A activity could lift spirits after

Nikkei reported that auto giants Nissan and Honda are to open

merger talks.

Here are key developments that could provide more direction

to markets on Wednesday:

- Thailand interest rate decision

- Indonesia interest rate decision

- U.S. interest rate decision