* All eyes on ECB rate decision and Draghi news conference
* Interest rate cut firmly priced in, question is what else
* RBNZ surprises with interest rate cut, signals more easing
By Patrick Graham
LONDON, March 10 (Reuters) - The euro fell around a third of
a cent against the dollar on Thursday, anticipating further
policy easing by the European Central Bank, while the New
Zealand dollar hit a two-week low after a surprise rate cut
there.
Expectations are high that ECB policymakers will deliver a
telling blow in the central bank's campaign to get inflation
rising again and drag the euro zone economy out of the mire
after eight years of weak growth.
But senior currency sales managers at a handful of major
banks say that speculators are probably only about a third as
much engaged on the euro as they were before a December decision
that underwhelmed and left many investments underwater.
"The ECB will probably try to deliver more than the market
expects to get a real effect from these measures. That means
that besides the rate cut that seems to be priced in by markets,
we will get something on the QE side," said Daniel Trum, a
currency strategist with the wealth management arm of giant
Swiss group UBS.
"But we also acknowledge that there is a risk that they
under-deliver as in December, and that would obviously
strengthen the euro."
The New Zealand dollar sank by almost 2 cents NZD=D4 after
the Reserve Bank shocked most in markets by cutting its official
cash rate by 25 basis points to 2.25 percent, citing a material
decline in a range of inflation expectation measures.
The central bank also signalled there would be at least one
more rate cut to come.
"All in, its a clear negative signal for the kiwi," said
Citi strategist Todd Elmer. "The question is the degree to which
this can extend amid a backdrop of globally rising risk
appetite."
The New Zealand currency had recovered around 0.2 percent
from the lows hit overnight, but at $0.6635 was still down
almost 2 cents from lows hit after the decision.
The ECB is widely expected to cut its deposit rate by 10
basis points to -0.40 percent, but it will be the other
announcements, and President Mario Draghi's comments in the news
conference that follows that should generate the most action.
Most important is how the ECB tries to shield banks from the
fallout of negative rates, following a sell-off in global bank
stocks on the issue.
The common currency was down 0.3 percent at $1.0977 EUR=
and 0.2 percent at 124.86 yen EURJPY= .
(Editing by Catherine Evans)