* Aussie outperforms kiwi, flirting with NZ$1.09 resistance

* Australian inflation next in focus

* NZ rate review on Thursday also awaited

By Ian Chua and Naomi Tajitsu

SYDNEY/WELLINGTON, April 22 (Reuters) - The Australian dollar rose on Tuesday ahead of local inflation data that could prompt markets into bringing forward expectations for when interest rates might rise.

The Aussie was 0.3 percent higher on the day at $0.9356

AUD=D4 , having drifted up from a two-week trough of $0.9315 as the local market returned from a four-day long Easter weekend.

Australia's annual inflation, due out on Wednesday, is expected to come in at 3.2 percent, the fastest pace in over two years and above the Reserve Bank of Australia's 2-3 percent target band. ECONAU

"A higher-than-expected number pushes inflation into an uncomfortably high place and should generate odds of a hike in the second half of this year, more so in Q4," said Greg Gibbs, strategist at RBS in Singapore.

Bank bill futures 0#YIB: currently imply only a one-in-four chance of a hike by December.

The Aussie was also firmer versus the yen and euro. Against the New Zealand dollar, it climbed 0.2 percent to NZ$1.0896

AUDNZD=R flirting with chart resistance seen just above NZ$1.0900.

The kiwi was more circumspect ahead of the Reserve Bank of New Zealand's (RBNZ) interest rate review on Thursday.

While the RBNZ is considered almost certain to lift rates by 25 basis points to 3.0 percent, it might signal a slowing in the pace of further tightening given a stubbornly strong currency, falling global dairy prices and easing inflation pressures.

The New Zealand dollar NZD=D4 was little changed at $0.8578, having dipped to a two-week low of $0.8555 overnight. Its trade-weighted index hit 79.68 =NZD , a one-month low which was first reached last week.

Investors are also wary of pushing the kiwi back towards a 2-1/2-year high of $0.8746 given that long speculative positioning has increased the risk that any correction could come swift and hard. IMM/FX

Still, the kiwi is likely to remain supported as New Zealand is almost alone among developed nations in lifting interest rates.

"We expect the NZD/USD to remain in the range (of $0.85-$0.87), that has been in force since the RBNZ began to hike on March 13 given we expect a follow-up hike on Thursday," ANZ analysts said in a note.

Technical resistance lay at $0.8575, its 55-hourly moving average which has largely held since mid-month, while bids were seen towards $0.8500.

New Zealand government bonds 0#NZTSY= stumbled, pushing yields as much as 5 basis points higher across the curve.

Australian government bond futures were under pressure as well with the three-year bond contract YTTc1 , down 5 ticks at 96.980. The 10-year contract YTCc1 shed 6 ticks to 95.980.

(Editing by Himani Sarkar)

((ian.chua@thomsonreuters.com)(+61 2 9373 1871)(RM: ian.chua.thomsonreuters.com@reuters.net))

Keywords: MARKETS AUSTRALIA FOREX/