By Wayne Cole

SYDNEY, Jan 24 (Reuters) - The Australian and New Zealand dollars blipped higher on Friday after President Donald Trump said he could get a deal with China and would rather not use tariffs, boosting currencies with a large trade exposure to the Asian giant.

China is Australia's biggest export market and investors globally often use the Aussie as a liquid proxy for trade risks, recently selling it on fear of massive U.S. tariffs.

Trump's seemingly softer tone thus helped lift the Aussie 0.4% to a five-week high at $0.6312 AUD=D3, breaking the former January top of $0.6302 and leaving it 1.9% higher on the week.

The kiwi dollar also added 0.4% to a five-week high of $0.5703 NZD=D3, giving it gains of 2.2% for the week.

The Aussie was also 1.5% higher for the week on the Japanese yen at 98.34 AUDJPY=, though it did ease off highs after the Bank of Japan raised rates by 25 basis points to 0.5% as expected and flagged more tightening to come.

Bond markets also had an upbeat week helped by a benign reading for New Zealand inflation. Yields on 10-year bonds NZ10YT=RR eased to 4.673%, from a peak of 4.888% last week, as markets wagered on a half-point cut in the Reserve Bank of New Zealand's 4.25% cash rate.

"Another 50bps cut at the 19-February meeting is a strong consensus view," said Ray Attrill, head of FX strategy at NAB.

"Beyond that point the pace of easing is highly likely to slow, with no more than 25bps cuts at future meetings and a rising chance of a pause in the cutting cycle as inflation stabilises in the top half of the target range."

Markets also imply around a 70% chance the Reserve Bank of Australia $(RBA)$ will make its first rate cut on Feb. 18, lowering the 4.35% cash rate by a quarter point.

Much, however, depends on the fourth-quarter consumer price report next week where analysts are hopeful the trimmed mean will rise by only 0.6%, the smallest increase since mid-2021.

"We expect trimmed mean inflation to print at 0.5% q/q, while the six-month annualised rate is forecast to fall to 2.6%, around the middle of the RBA's 2-3% target band," said Adam Boyton, head of Australian economics at ANZ.

"We think that a downside surprise to the RBA's published forecasts of 0.7%, in line with our expectations, will see the RBA cut in February."

(Reporting by Wayne ColeEditing by Shri Navaratnam)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))