KEY POINTS:
The New Zealand dollar powered to new 10-month highs today and within spitting distance of US70c.
October retail sales came out stronger than expected, increasing pressure on the Reserve Bank to either hold off easing, or increase interest rates.
The 0.3 per cent rise in sales in October exceeded the median prediction of a 0.1 per cent rise.
"In its recent monetary policy statement, the Reserve Bank made it clear that if the data surprises on the upside in coming months, it will increase official interest rates next year," Macquarie Research said.
Higher interest rates underpin the currency, although a strong currency of itself tightens monetary conditions and reduces inflation pressures, if not spending propensities.
BNZ economist Stephen Toplis said demand was not just holding up, it was picking up, and he hoped the Reserve Bank would deal with it by hiking rates.
The only thing holding the kiwi back was data showing stronger-than-expected United States consumer spending.
The kiwi closed stronger across the board with the trade weighted index ending on a 10 month high of 68.26 from 67.82 yesterday.
At 5pm, the kiwi was buying US69.40c from US69.12c at 5pm yesterday while against the aussie, the NZ dollar ended on A88.21c from A87.75c yesterday evening.
The US dollar steadied in Tokyo trading after scoring gains against most currencies on the November retail sales data that eased some worries about the Federal Reserve possibly cutting interest rates next year.
The 1.0 per cent jump in sales far exceeded expectations and was the strongest in four months, suggesting that US consumers are holding up before the holiday shopping season even as the housing market suffers through a sharp slowdown.
The euro was steady at US$1.3210 holding below the 20-month high of US$1.3370 struck earlier this month while the dollar slipped to 117.45 yen down from near 117.60 yen late in New York trade.
Reuters currency rates 5pm today 5pm yesterday:
NZ dlr/US dlr US69.40c US69.12
NZ dlr/Aust dlr A88.21c A87.75c
NZ dlr/euro 0.5252 0.5204
NZ dlr/yen 81.51 80.83
NZ dlr/stg 35.28p 35.07p
NZ TWI 68.26 67.82
Australian dollar US78.63c US78.81c
Euro/US dollar 1.3210 1.3283
US dollar/yen 117.49 116.93
- NZPA