By Swati Pandey and Rebecca Howard
SYDNEY/WELLINGTON, July 25 (Reuters) - The Australian dollar steadied on Monday with investors on the sidelines ahead of inflation data later this week which could cement the case for another rate cut as early as next month.
Underlying inflation is expected to dip to a fresh trough of 1.4 percent, a Reuters poll showed. The figures are out on July 27. market is pricing in around a 64 percent chance of a rate cut in August 0#YIB: suggesting the biggest move would come if inflation surprised on the high side.
The Australian dollar AUD=D4 was a shade higher on Monday at $0.7471 after slipping 1.44 percent last week, breaking a robust run of seven straight weeks of gains. That was also its worst weekly showing since the beginning of June.
Across the Tasman Sea, the New Zealand dollar NZD=D4 remained on a slippery slope, falling 0.3 percent to 0.6977. It has dropped on seven out of the last 10 trading sessions and is down 2.2 percent in July so far.
In contrast, the Aussie dollar is up a quarter of a cent this month.
The losses in the kiwi dollar came on talk of further rate cuts as the country's central bank set its sights on the high dollar and perilously low inflation. consistent losses in recent weeks, the kiwi dollar is still up more than 8 percent over the last six months.
"The lull in further declines seems to be the market catching its breath rather than having a change of heart," said OM Financial Private Client Manager Stuart Ive.
Any rallies remain opportunities to sell, he added, tipping near term support at $0.6975-$0.6945 and resistance at $0.7010 - $0.7065.
New Zealand government bonds 0#NZTSY= eased, sending yields 1 basis point higher across most of the curve.
Australian government bond futures were largely unchanged, with the three-year bond contract YTTc1 off a tick at 98.58. The 10-year contract YTCc1 also lost a tick to 98.0650. (Editing by Kim Coghill)