New Zealand retail sales surge in February

New Zealand retail sales surged at their fastest pace in nearly three years in February, backing views the central bank will need to lift interest rates again and pushing up the currency to a near two-year high.

Seasonally adjusted sales for the month jumped 1.9 %, the largest gain since March 2004, well above a median forecast for a gain of 0.5 % in a Reuter??™s poll of analysts. Actual sales rose 6.4 % on a year earlier, beating forecasts for a 4.1 % rise.

The New Zealand dollar jumped nearly half a cent to a high of USD 0.7358, its strongest since May 2005, before easing slightly. Bank bills were sold off, with yields rising 5 basis points.

The Reserve Bank of New Zealand raised the official cash rate to 7.5 % on March 8 and warned it may have to raise again given inflation pressures from household-related sectors.

NZD/USD traded between 0.7308 and 0.7358.

Weaker U.S. Dollar

The euro hit a two-year high against the dollar on Friday on expectations that euro zone interest rates will soon rise, while investors awaited a meeting of Group of Seven finance ministers and central bankers later in the day.

The single currency hovered close to a record high against the yen, and traders expected more yen losses as G7 officials, and specifically European delegations, were unlikely to single out yen weakness at the gathering in Washington.

This, along with indications from the European Central Bank on Thursday that it will raise rates in June or beyond to stem inflation, drove the euro to USD 1.3519 on electronic trading platform EBS on Friday, it??™s highest since January 2005.

EUR/USD traded between 1.3482 and 1.3524.