NZ dollar scales 7-week peak, Australian dlr firm

* Kiwi on track for 1.4 pct weekly gain vs USD

* Aussie down 1.4 pct vs kiwi for the week

* Heavy week ahead for Aussie with RBA, GDP, trade, retail data

By Naomi Tajitsu and Cecile Lefort

SYDNEY/WELLINGTON, Feb 28 (Reuters) - The New Zealand dollar climbed to a seven-week high on Friday after upbeat business data only reinforced expectations for a rate hike next month, while the Australian dollar consolidated overnight gains.

The kiwi NZD=D4 rose as far as $0.8415, its highest since mid-January, from $0.8307 in early trade, after a survey found domestic business confidence climbed to a 20-year high this month. News Search ID:nW9N0IO02K

Support for the kiwi has been strong in past months with the market convinced the Reserve Bank of New Zealand will start hiking interest rates at its March 13 review, far ahead of most other developed nations.

It was last at $0.8405 to show a gain of 1.4 percent for the week. Technicals point to more gains after it poked above trendline resistance at $0.8379, drawn from highs hit since October.

Support lay at $0.8356, the 61.8 percent retracement of its October-February selloff.

The kiwi jumped to a one-month high of 78.86 =NZD on a trade-weighted basis, lifting it towards a post-float high of 79.39 set in April 2013.

It kept the upper hand against the Aussie AUDNZD=R which plumbed a one-month low around NZ$1.0665 on Thursday, when the Aussie was stung by a weak capex reading. ECONAU

The Aussie last stood at NZ$1.0680 to show a loss of 1.4 percent for the week, the largest such drop since mid-January.

The Reserve Bank of Australia (RBA) holds its monthly policy meeting on March 4 and economists expect rates to be on hold for the seventh consecutive month as the economy tries to transition from a resources investment boom to construction and household consumption.

Interbank futures 0#YIB: imply only a one-in-four chance of an easing from a record low of 2.5 percent by October.

The Aussie dollar was firm at $0.8977 AUD=D4 , ahead of a data-heavy week also including gross domestic product, trade balance and retail sales. ECONAU

It showed resilience in having recovered from a low of $0.8903 set on Thursday after disappointing local business investment data.

"The Aussie is likely to remain bid because of the RBA's neutral policy, but realistically it doesn't belong anywhere near these levels and certainly not above 90 cents," said David Scutt, a trader at Arab Bank Australia.

He highlighted recent disappointing data including jobs and capital expenditure.

The Aussie was facing chart resistance around $0.8990, the 76.4 percent of the January-February fall and again at $0.9081, a peak touched last week.

Australian government bond futures hovered near three-week highs with the three-year bond contract YTTc1 up 1 tick at 97.130. The 10-year contract YTCc1 added 1.5 ticks to 96.015.

New Zealand government bonds were little changed.

(Editing by Eric Meijer)

((Cecile.Lefort@thomsonreuters.com)(+61 2 9373-1234)(Reuters Messaging: cecile.lefort.thomsonreuters@reuters.net))

Keywords: MARKETS AUSTRALIA/FOREX