Australia, NZ dlrs scale two-month highs, RBA hawkish on easing

By Wayne Cole

SYDNEY, Feb 21 (Reuters) - The Australian and New Zealand dollars hovered near two-month highs on Friday as worries about a global trade war abated a little, while Australia's central bank sounded a hawkish tone on future rate cuts.

Having eased for the first time in four years this week, the Reserve Bank of Australia seems in no hurry to go again with governor Michele Bullock saying cuts are far from guaranteed.

"Future rate cuts will likely be more a case of benign inflation readings allowing the RBA to remove the restrictive nature of policy settings, rather than macro weakness requiring easing," said Andrew Ticehurst, an economist at Nomura.

Data on inflation for the first quarter is not due until late April, after the next RBA meeting on April 1.

"We maintain our views of 25bp rate cuts in May and August, and on the strategy side, a tactically positive view on AUD," said Ticehurst.

Markets have got the message and imply a minor chance of a cut in April, rising to 68% for a move in May. Only 40 basis points is now priced in for this year. 0#AUDIRPR

The Antipodeans also got a lift on Thursday when U.S. President Donald Trump said a trade deal with China was "possible", but without offering any specifics.

China is Australia's biggest export market and a trade war between China and the United States could crimp the Australian economy and demand for resources.

The general easing in tariff concerns combined with a dip in Treasury yields pushed the U.S. dollar down broadly, while a break of resistance at $0.6331 has squeezed a market that has been very short of Aussie.

All this left the Aussie up at $0.6403 AUD=D3, having climbed 0.9% overnight and reached as far as $0.6408. It was now within a whisker of breaking the 100-day moving average at $0.6409 and opening the way toward $0.6547.

The kiwi dollar held firm at $0.5766 NZD=D3, after jumping 1.0% overnight to clear resistance at $0.5750. The next barrier is at $0.5799.

"Delay until Q2 of certainty surrounding Trump 2.0 tariff policies has allowed markets to shift their gaze elsewhere," said Ray Attrill, head of FX strategy at NAB.

"But the real test will only come in April once the full extent of Trump's tariff policy intentions is better known," he added, cautioning the Aussie could slip under $0.6000 should the U.S. go ahead with major tariffs on China.