SYDNEY, Feb 21 (Reuters) - The Australian and New Zealand dollars rallied on Monday as hopes for a peaceful solution to Russian-Ukraine tensions boosted risk assets, ahead of a busy week of domestic events.
Share markets bounced on news U.S. President Joe Biden had accepted in principle a summit with Russia's Vladimir Putin over the Ukraine crisis.
The Aussie added 0.4% to $0.7201 , but still faces resistance at $0.7228 and $0.7250. Support lies at $0.7158 and $0.7100.
The kiwi dollar firmed 0.2% to $0.6709 , but faces resistance around $0.6730. Support lies at $0.6680 and $0.6593.
The kiwi has to navigate a Reserve Bank of New Zealand (RBNZ) meeting on Wednesday where the market has already priced in a quarter-point rise in rates and would only really be impressed by more.
A Reuters poll found all but one of 20 analysts thought the RBNZ would stick with a gradual 25-basis-point increase to 1.0%, and a string of further moves to 2.25% by year end.
The swaps market implies around a 36% chance of a half-point hike this week, and rates at 2.5% by Christmas.
Jarrod Kerr, chief economist at Kiwibank, assumes the RBNZ will lift its own forecasts for the cash rate to show a hike at every meeting this year and a top close to 3.0%.
The central bank could also outline its plans for running down its balance sheet and over NZ$50 billion of bonds.
"Not wanting to cause too much volatility in rates markets, we expect the RBNZ to sell down their bonds at a very measured pace," said Kerr. "'Predictably boring' would be the way we'd like to describe the RBNZ’s future actions."
In Australia, the main event will be wages data for the December quarter where forecasts favour a rise of 0.7% to take the annual pace up to 2.4%, from 2.2%.
That would be the fastest annual gain since late 2014, though still short of the 3%-plus the Reserve Bank of Australia (RBA) wants to see.
The RBA has said it is plausible a rate rise could come later this year, while markets are fully priced for a move to 0.25% by June.
"A 0.7% rise in Q4 wages would take the annualised pace of wages growth in the second half of 2022 to 2.7%. So better, but not great," said David Plank, head of Australian economics at ANZ.
"As such we think a print of 0.8% q/q or higher is needed to advance the case for a rate hike as soon as June."
Editing by Shri Navaratnam