By Ian Chua and Charlotte Greenfield
SYDNEY/WELLINGTON, March 7 (Reuters) - The Australian dollar hovered just under a seven-month peak on Monday, pausing after last week's massive rally in the absence of fresh impetus, while caution ahead of a central bank meeting capped its New Zealand peer.
The Aussie AUD=D4 was last at $0.7413, down 0.4 percent on the day, trimming last week's 4.4 percent gain - its best weekly performance in over four years.
Elias Haddad, senior currency strategist at Commonwealth Bank said further gains for the Aussie will be limited this week due to external developments.
"We expect the ECB and the RBNZ to be dovish, pushing USD higher against most major currencies, including AUD."
The kiwi dipped below 68 U.S. cents NZD=D4 , recoiling from a two-month high of $0.6819 set on Friday. It rose a more modest 2.8 percent last week.
Investors favoured the Aussie after last week's data showed an unexpected acceleration in fourth quarter economic growth. Higher commodity prices and an ongoing recovery in risk appetite further aided the currency.
The upbeat Australian data has made it even more unlikely the Reserve Bank of Australia (RBA) will act on its conditional easing bias. In contrast, there is a small chance the Reserve Bank of New Zealand could cut rates at Thursday's policy review.
While the majority of economists polled by Reuters expect the RBNZ to hold rates at the current record low 2.5 percent, a handful of respondents see a quarter-point cut. markets are pricing in a 28 percent chance of a cut, and are fully priced for an easing by June.
Following a negative lead from U.S. Treasuries, New Zealand government bonds 0#NZTSY= edged lower, sending yields as much as 2 basis points higher on the curve.
Australian government bond futures also slipped, with both the three-year and 10-year bond contracts YTTc1 YTCc1 6 ticks lower at 98.030 and 97.385, respectively.