The Australian dollar was trading just below its two-month high late today after government data showed retail sales surged again in February.
Retail sales rose a seasonally adjusted 1.3 per cent in February from January, when they rose 1.2 per cent. This represents retailers' strongest start to the year since 2001, economists said, attributing it to central bank interest rate cuts throughout 2012, boosting interest-rate sensitive sectors ahead of an expected slowdown in mining investment.
The strength of the data, which follow significant employment growth in February, support the Reserve Bank of Australia's decision Tuesday to leave interest rates for the third time at a near-record low of 3.0 per cent, economists said.
"These data, along with rising consumer confidence and house prices, suggest that household spending is beginning to respond to lower interest rates," said Australia & New Zealand Banking Group economist Justin Fabo.