* RBNZ surprises with interest rate cut, signals more easing
* Euro slips amid expectations of further ECB easing steps
* Loonie firms after Bank of Canada holds pat on policy
By Lisa Twaronite
TOKYO, March 10 (Reuters) - The euro was under pressure in
Asian trade on Thursday ahead of a European Central Bank meeting
at which policymakers were expected to take further easing
steps, while the kiwi skidded after the Reserve Bank of New
Zealand surprised with an interest rate cut.
The New Zealand dollar NZD=D4 nursed losses after tumbling
more than a cent after the RBNZ's decision early on Wednesday to
cut 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 at least one more rate
cut to come.
The New Zealand currency was last steady around a one-week
low at $0.6655, after tumbling from the overnight high of
$0.6809.
The ECB is expected to cut the deposit rate by 10 basis
points to -0.40 percent, announce more asset purchases and
possibly introduce tiered interest rates like the Bank of Japan
in a bid to boost inflation, according to a Reuters poll
published on Monday.
"This is probably not a consensus view, but the market is
almost pricing in the entire kitchen sink from the ECB, and I
think it's setting itself up for disappointment," said Jennifer
Vail, head of fixed-income research at U.S. Bank Wealth
Management in Portland, Oregon.
While tighter financial conditions a month ago may have
warranted more drastic easing steps, some of those conditions
have showed signs of improvement, she said, and therefore she
expects only a further cut to interest rates into negative
territory and a modest increase in purchases under the
quantitative easing programme.
"The size of their response has to be directly related to
stress in the market," Vail said, adding that the euro could get
a bump higher after the policy meeting outcome.
The common currency was down 0.1 percent at $1.0986 EUR=
and slipped about 0.2 percent against the yen to 124.39
EURJPY= .
The dollar was steady against its Japanese counterpart at
113.26 yen JPY= .
In other central bank action, the loonie got a lift from the
Bank of Canada, which left policy rates unchanged on Wednesday
and said its economic outlook was largely the same as in January
as recent market volatility "appears to be abating."
While the Canadian currency has firmed since hitting a
12-year low of C$1.4474 in January, it is still significantly
weaker than it was a year ago. The greenback was last down about
0.1 percent at C$1.3238.