Australia, NZ dollars steady above multi-month lows, RBNZ looms

By Stella Qiu

SYDNEY, Nov 24 (Reuters) - The Australian and New Zealand dollars steadied above multi-month lows on Monday, with markets fully pricing a quarter-point cut in kiwi rates this week, but less sure about the prospects of yet more easing afterward.

The two Antipodeans recovered on Friday as global stocks bounced on optimism that the Federal Reserve might still be able to cut rates next month after New York Fed President John Williams said interest rates can fall in the near term.

The kiwi NZD= was flat at $0.5607, after edging up 0.5% on Friday, rising from a seven-month low of $0.5581. Still, the technical outlook remained bearish with it trading below the 7-day, 14-day and 21-day moving averages.

The Reserve Bank of New Zealand, led by outgoing Governor Christian Hawkesby, will meet on Wednesday where a quarter-point rate cut to 2.25% has been fully priced in. There is a small 7% risk that it could surprise with a 50 basis point move like it did in October.

Jarrod Kerr, chief economist at Kiwibank, said a half-point move is within the realms of possibility and should be on the table for discussion by policymakers.

"Another 'surprise' 50 bp move gets the cash rate to 2%, without the long wait until February's decision. A 50 bp move to 2% would clear the decks, and clean the slate for incoming Governor, Dr Anna Breman," Kerr said.

Breman is set to start her five-year term from next Monday but her first decision would not be until February, some three months away.

The Aussie AUD= was also little changed at $0.6454, having gained 0.3% on Friday to move away from a three-month trough of $0.6422. It is facing resistance at the 200-day moving average of $0.6461.

Australia's statistics bureau will release the new complete monthly CPI data on Wednesday to replace the old and partial series. Even though the data is new and the RBA is not putting too much weight on it yet, investors are watching prices in housing and market services to get a better gauge on inflation trends.

Trent Saunders, a senior economist at the Commonwealth Bank of Australia, expects the headline CPI to fall by 0.2% in October, taking the annual rate to 3.6%.

"Softer electricity and fuel prices are the main drivers of the decline in the month. Market services inflation is also expected to slow a little, while rents and new dwelling price inflation are likely to remain firm."

Swaps imply little chance of a rate cut from the RBA until May next year when a move is about 50% priced in, after an inflation surge in the last quarter dashed hopes for any more policy easing.