SYDNEY, Dec 24 (Reuters) - The Australian dollar stayed on the defensive on Tuesday after the country's central bank signalled it was closer to cutting interest rates but needed the flow of economic news to support its confidence that inflation was slowing.
Minutes of the Reserve Bank of Australia's $(RBA)$ December policy meeting showed the board thought policy would need to stay restrictive for the time being, but opened the door to easing as early as February should data unfold as expected.
The bank had surprised many with its sudden dovish turn at the meeting, and markets have since lifted the probability of a February easing to around 50%.
April is fully priced for a quarter-point cut in the 4.35% cash rate, with 3.85% implied by July.
The RBA's softer tone contrasted with the Federal Reserve's caution on further easing and weighed on an Aussie already burdened by risk aversion and worries about China's economy.
That left the Aussie idling at $0.6241 , just above its recent two-year trough of $0.6199. Resistance lies around $0.6339, with major support at a 2022 low of $0.6170.
The kiwi dollar was likewise stuck at $0.5640 , having hit a two-year low of $0.5608 last week. Support lies at its 2022 nadir of $0.5512, while resistance is all the way up at $0.5758.
It took a heavy blow last week when data showed New Zealand's economy contracted much more sharply than expected in the second and third quarters.
Markets quickly moved to price in another rate cut of 50 basis points from the Reserve Bank of New Zealand when it next meets on Feb. 19. The current 4.25% cash rate is seen reaching 3.0% by the end of next year.
(Reporting by Wayne Cole; Editing by Jamie Freed)
((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))
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