Figures released today showed seasonally adjusted retail sales volumes rose 1.6 per cent in the three months ended September 30, more than the 0.5 per cent increase economists had generally expected.
That was a sharp lift from the 0.2 per cent pace of growth in the June quarter. Values were up 1.4 per cent as some retailers still struggled to pass on rising costs to consumers.
Tim Kelleher, the head of foreign exchange sales at Commonwealth Bank of Australia, says the domestic currency rose as high as 64.30 US cents after the retail sales data but met heavy resistance.
That has happened on a number of occasions since November 13, when the Reserve Bank decided to keep its official cash rate steady at 1 per cent.
The currency has traded in a tight 63.80 US cents to 64.40 cents range since then.
"The longer it spends in this range, the bigger the move when it breaks out," Kelleher said, but added he doesn't know what the catalyst will be.
"It's hard to see anything happening, given it's Thanksgiving," he says. The US markets will be closed on Thursday for the Thanksgiving holiday.
"Liquidity will be quite poor at the end of the week, which could help things."
One potential catalyst could be Reserve Bank of Australia Philip Lowe's speech tonight on unconventional monetary policy. The RBA's cash rate is at 0.75 per cent and the market is speculating that once it cuts to 0.5 per cent, it will be forced to resort to quantitative easing, or printing money, if it judges Australia's economy needs further stimulus.
But Kelleher isn't convinced Lowe will say anything market-moving. "I don't think we will get anything new out of the RBA guys."
Another potential catalyst could be ANZ Bank's latest monthly survey of business confidence, due on Thursday. Quarterly predictions are due from the New Zealand Institute of Economic Research overnight.
In the October ANZ survey, a net 42.4 per cent of those surveyed were pessimistic about the outlook for the economy, an improvement from the 11-year low at 53.5 per cent in September.
Less encouraging, a net 3.5 per cent of businesses were expecting their own activity to deteriorate, the lowest level since April 2009.
The New Zealand dollar was trading at 94.65 Australian cents from 94.49, at 49.77 British pence from 49.62, at 58.28 euro cents from 58.14, at 69.96 Japanese yen from 69.74, and at 4.5131 Chinese yuan from 4.5030.
The two-year swap rate edged up to a bid price of 1.1335 per cent from 1.1208 per cent yesterday while 10-year swaps fell to 1.4700 per cent from 1.4775 per cent.
