SYDNEY/WELLINGTON: The New Zealand dollar hit a one-month high versus its US and Australian counterparts on Thursday after the Reserve Bank of New Zealand kept interest rates on hold but said it expected inflation pressures to pick up, suggesting more risk of a rate rise than a cut over time.
* Kiwi rallies as high as $0.8295 from around $0.8250 before the announcement, scaling its strongest since Nov. 7. By 2059 GMT, the currency had pulled back a touch to $0.8280.
* Australian dollar slides roughly half an NZ cent to around NZ$1.2605 according to Reuters data, its weakest since early November. Kiwi gains on Aussie on the view that NZ rates could rise while Australia is in a rate-cutting cycle.
* Kiwi climbs broadly, hitting an eight-month high around 68.30 yen, while also gaining against the euro.
* RBNZ holds its official cash rate at a record low 2.5 percent as widely expected by economists, and says it expects inflation pressures to pick up due to an expanding housing market and as the Canterbury earthquake rebuild gets underway.
* Announcement triggers demand for the kiwi given that investors had priced in a slight chance that the central bank might have cut rates on Thursday.
* NZ bank bills slip across the board after the RBNZ announcement, as markets trim back the risk of an interest rate cut in the coming months.
* New Zealand government bonds fall, pushing yields as much as six basis points higher at the short end of the curve.
* "There's been a trimming back in market pricing (for lower rates), and in that there's a recognition that the Reserve Bank is not showing that it has been seriously considering a rate cut," said Nick Tuffley, chief economist at ASB Bank.
* Aussie trades at $1.0456, holding near $1.0485 hit in offshore trade as investors remain attracted to the currency's relatively higher yield even after Australia's central bank cut rates by 25 basis points earlier this week.
* Aussie also shakes off data on Wednesday showing the economy grew at its slowest pace in 1-1/2 years, and hovers near a two-month high of $1.0491 hit late last month. A break above that level could see a test of $1.0520, a high hit in September.
* Aussie hovers around 86.15 yen,, hovering hear an eight-month high hit late last month.
* Resistance for the Aussie seen above $1.0480, while options with a strike price of $1.0500 expiring later in the day could provide a near-term ceiling for the Aussie.
* Bids suspected below $1.0430, while trendline support seen at $1.0417, drawn from lows hit in June and October.
* Kiwi technical support seen at $0.8237, its intraday low, and below that at $0.8204, its 55-day moving average. But a further push higher could be capped given offers suspected above $0.8300.
* Australian government bonds inch down, with the three-year contract indicated 0.010 point lower at 97.370, while the 10-year contract slips the same amount to 96.910.
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