* Rate cut bets sink dollar vs euro
* RBA rate decision at 0330 GMT closely watched
* G7 finance ministers conference call at 1200 GMT
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, March 3 (Reuters) - The euro held steady just
under its highest in two months against the dollar on Tuesday,
on expectations that coronavirus-driven monetary easing in the
United States can and will run deeper than any similar action in
Europe.
Both U.S. Federal Reserve Chairman Jerome Powell and
European Central Bank (ECB) President Christine Lagarde have
hinted at action in recent days. But with the ECB's benchmark refinancing rate at 0% and the
Fed's funds rate range between 1.5% and 1.75%, the Fed has more
room to manoeuvre, leading investors to unwind carry trades
accordingly.
The euro EUR= climbed as high as $1.1185 overnight, its
highest since early January while the dollar sank to a six-week
low against a basket of currencies =USD .
"The dollar is finding good sellers here," said Chris
Weston, head of research at brokerage Pepperstone, in a note.
"The markets are seeing vulnerabilities by what is priced
into rates (and) senses a Fed who may go hard at 18 March
meeting and cut by 50 basis points."
The euro last bought $1.1129 and the dollar steadied on the
basket at 97.544, but moves were capped as traders waited to see
whether central banks can live up to expectations.
The Japanese yen JPY= was steady at 108.26 per dollar. The
British pound GBP= inched higher to $1.2767.
Some details may be revealed after G7 finance ministers and
central bank governors hold a conference call at 1200 GMT to
discuss measures to deal with the widening coronavirus outbreak.
The Reserve Bank of Australia's (RBA) interest rate decision
at 0330 GMT will also be closely watched, since it is the first
major policy meeting since last week's dramatic shift in money
market pricing. Futures imply that a 25-basis-point cut is all but certain,
leaving the Australian dollar vulnerable to a surprise either
side. 0#YIB AUD/
"If they cut by 50 (basis points), it will fall," said
Westpac FX analyst Imre Speizer.
"If they cut by 25 and signalled more to come, that would
probably hold the Aussie where it is. If they cut by 25 and
signalled no more to come, I think the Aussie would rise."
The Aussie, which hit an 11-year low as markets dived with
growing pandemic fears on Friday, was steady in morning trade at
$0.6537 - about 1.6% above its trough.
The New Zealand dollar NZD=D3 also held steady, at
$0.6263, since the RBA's decision may force the hand of New
Zealand's central bank when it meets later in the month.
Also on the horizon is the release of euro zone inflation
data at 1000 GMT and the Super Tuesday Democratic Party
primaries in the United States.
The Bank of Canada meets to set its policy rate on
Wednesday.