By Cecile Lefort and Rebecca Howard
SYDNEY/WELLINGTON, June 7 (Reuters) - The Australian dollar climbed to a one-month high on Tuesday after the Reserve Bank of Australia's (RBA) kept monetary policy unchanged and investors modestly scaled back expectations of a near-term cut in rates.
The Australian dollar AUD=D4 shot up half a U.S. cent to a peak of $0.7426, before steadying at around $0.7421, up 0.7 percent on the day. A break of key resistance around $0.7430 would bring $0.7480 in focus.
The Aussie rose nearly 1 percent against the yen, euro and kiwi dollar.
The RBA kept the cash rate at a record low 1.75 percent at its monthly review, after cutting last month for the first time in one year.
While it was a widely anticipated outcome, doves were disappointed that the statement did not give an explicit easing bias, resulting in short positions squeezed higher.
"Overall the statement seems fairly neutral. There's no indication here that they're about to cut," said Shane Oliver, chief economist at AMP Capital.
Investors trimmed the risk of a July cut with interbank futures 0#YIB: implying a mere 14 percent chance, down from 25 percent before the policy review. The market gives a 78 percent chance of a move by year-end.
The New Zealand dollar NZD=D4 was dragged higher to$0.6926, having touched a peak of $0.6965 on Monday.
The focus now is on the Reserve Bank of New Zealand's policy review on Thursday. While it is expected to hold rates at a record low of 2.25 percent, there is a risk of a cut given low inflation and the strong New Zealand dollar.
The kiwi is up 1.5 percent so far this year.
Fourteen of 23 economists polled by Reuters expect the central bank to stand pat on Thursday while nine forecast a rate cut. NZ/POLL
The central bank surprised markets in March when it cut by 25 basis points and said further reductions may be necessary given New Zealand's tepid inflation.
New Zealand government bonds 0#NZTSY= fell, with yields as much as four basis points higher.
Australian government bond futures eased with the three-year bond contract YTTc1 off 8 ticks at 98.390. The 10-year contract YTCc1 slipped 5 ticks to 97.7950, pulling away from an all-time peak of 97.8700 earlier in the day. The 20-year contract YXXc1 shed 1.5 ticks at 97.2300.
Yields on 10-year cash bonds AU10YT=RR edged up to 2.2 percent, from a record low of 2.1 percent set on Monday. (Editing by Sam Holmes; Editing by Sam Holmes)