By Wayne Cole

SYDNEY, Oct 1 (Reuters) - The Australian dollar hovered near three-year highs against its New Zealand neighbour on Wednesday, as the outlook for local interest rates diverged, while concerns over an impending U.S. government shutdown restrained the greenback.

Markets have scaled back expectations of a near-term rate cut from the Reserve Bank of Australia after it highlighted upside risks to inflation following its meeting on Tuesday.

The Commonwealth Bank of Australia CBA.AX has joined National Australia Bank NAB.AX, two of the country's "Big Four" banks, in abandoning expectations of a quarter-point rate cut at the RBA's November meeting, now forecasting a single cut to 3.35% in February instead. 0#AUDIRPR

"The RBA statement read on the hawkish side, reflecting stronger activity data and upside surprises on monthly inflation," said Belinda Allen, head of Australian economics at CBA. "We feel there are enough reasons to see the RBA remain on hold in the two remaining meetings in 2025."

Markets now imply only a 35% chance of a cut in November and 50% for December, and have priced in 29 basis points of total easing, compared with 47 basis points a couple of weeks ago.

Analysts at Westpac and ANZ are still leaning toward a November cut, but only if third-quarter inflation data due in late October is not too hot. Generally, a quarterly rise of 0.8% or more is seen as likely to keep rates on hold.

The diminished chance of lower rates kept the Aussie at $0.6605 AUD=D3, after climbing 0.6% overnight to as high as $0.6629. The rally took it further away from last week's trough of $0.6521, but needs to clear resistance at $0.6628 to maintain momentum.

The kiwi dollar lagged behind at $0.5790 NZD=D3, still not far from its recent six-month low of $0.5759. The kiwi was again sold for the Aussie, which reached a top at NZ$1.1416 AUDNZD=R to be up 2% in as many weeks.

The Reserve Bank of New Zealand is considered certain to cut its rates by 25 basis points to 2.75% at its meeting next week, with markets implying a 35% chance of an outsized easing of 50 basis points.

One potential hurdle for the Aussie was reports that China's state iron ore buyer had taken steps to pause purchases of iron ore cargoes from Australian miner BHP BHP.AX.

Iron ore is Australia's most valuable export, bringing in A$162 billion in the year until July.

(Reporting by Wayne Cole; Editing by Sherry Jacob-Phillips)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))