(Add reaction post RBA, comment)
By Cecile Lefort and Swati Pandey
SYDNEY/WELLINGTON, Nov 3 (Reuters) - The Australian dollar muscled higher on Tuesday after the Reserve Bank of Australia (RBA) wrong-footed bears by skipping a chance to cut interest rates, and appeared to be in no rush to ease again.
The Australian dollar AUD=D4 was up two-thirds of a cent on the day at $0.7204, pulling further away from a recent three-week low of $0.7067.
Immediate resistance was found at $0.7225 and a break would target the October high of $0.7382.
The RBA left the cash rate at a record low of 2.0 percent at its monthly policy meeting, where it has been since May. It said the outlook for the economy had actually "firmed a little" in recent months with business conditions improving and employment stronger than expected.
While it also said subdued inflation meant there might be room for a further easing, the market did not appear to be convinced on the timing of the next move.
"There is nothing suggesting an urgency for a December cut," said Michael Turner, a strategist at RBC Capital Markets.
Debt markets slid as investors lengthened the odds on a move before the end of the year. Interbank futures 0#YIB: imply a one-in-three chance of a cut, from two-in-three before the RBA.
The market, however, is still fully priced for a quarter-point-cut by April.
The Aussie powered up against the yen and euro, while it bounced off six-month lows against its kiwi cousin to be last at NZ$1.0665. AUDNZD=R
The New Zealand dollar NZD=D4 was dragged higher to $0.6753, from $0.6733 early. It jumped 5.7 percent in October, the largest monthly gain in two years. Support was found at $0.6620.
The focus was on Wednesday's global dairy trade auction (GDT). Milk is New Zealand's top export earner.
"The GDT auction may take some of the shine off the NZD, with a range of factors suggesting the auction could see more of a pullback in prices than implied by the circa 5 percent decline in NZX futures," ANZ said in a morning note.
Weaker prices would also add to speculation the Reserve Bank of New Zealand will deliver another 25 basis points at its December meeting.
New Zealand government bonds were mixed, with yields between 1 basis point lower and 4.5 basis points higher.
Australian government bond futures eased, with the three-year bond contract off 6 ticks at 98.160. The 10-year contract shed 6.5 ticks to 97.2850, while the 20-year contract was down 4.5 ticks at 96.7500.