Australian dollar gets no support from well-flagged rate hike

By Wayne Cole

SYDNEY, Sept 29 (Reuters) - The Australian dollar slipped on Tuesday after the country's central bank lifted interest rates to a 15-year peak as expected and left the door open to further hikes, yet still managed to underwhelm a very hawkish market.

Wrapping up its September board meeting, the Reserve Bank of Australia board voted unanimously to raise its cash rate by 25 basis points to 4.60%, the fourth hike this year.

In a media conference, RBA Governor Michele Bullock said the board believed financial conditions were now tight but were unsure if that would be enough to bring inflation down. She also noted policy worked with a lag and the board wanted to see how the hikes already delivered would impact the economy.

"It is possible that with financial conditions now tighter, officials will be content to watch for a while and only react if more bad news is received on the inflation front," said Sally Auld, chief economist at NAB.

"Each decision to hike from here is a tougher call," she added. "We continue to forecast the RBA on hold with the risk that further tightening may be required."

Markets reacted by scaling back the chance of a November hike to 32%, from 44%, while a December move came in to 50% from 60%.

The Aussie fell 0.3% to $0.6993 , breaking support at $0.7400. Resistance lies at $0.7043 and $0.7139, with major support down at $0.6922.

Consumer price data for August is due on Wednesday and forecast to show an acceleration to 4.1% from 3.5%, in part due to a jump in fuel costs. Core inflation is seen staying at 3.6%, well above the RBA's target range of 2% to 3%.

"That release will be an important gauge of the extent of domestic price pressures and will be a key input into the policy outlook," said Katherine Palmer, head of fixed income strategy at BlackRock Australia.

"November's RBA meeting is live, particularly given today's unanimous decision."

The kiwi dollar eased 0.1% to $0.5654 , though $0.5650 support held for now. A break would threaten the June low at $0.5627, with resistance around $0.5687 and $0.5748.

Markets imply a 78% chance the Reserve Bank of New Zealand will raise rates by a quarter point to 3.0% when it meets on October 28, and move again by February.

Rates are seen peaking near 4.0% late next year, far above the RBNZ's own projection of 3.20%.