By Wayne Cole and Charlotte Greenfield
SYDNEY/WELLINGTON, Jan 11 (Reuters) - The Australian dollar jumped to a three-month peak on Thursday after a surprisingly strong reading on retail sales boosted the outlook for consumer spending and economic growth, while narrowing the odds on a rate hike this year.
The Australian dollar AUD=D4 hopped to $0.7875, from $0.7842, but again shied away from stiff chart resistance at $0.7884 and $0.7898 - a double top hit in September.
The rally came after official data showed retail sales climbed 1.2 percent in November, three times the market forecast and the biggest gain since early 2013. were in large part boosted by demand for new iPhones and Black Friday special offers, so there was a risk of a pullback in December.
Yet it still suggested consumer spending had made a sizeable contribution to economic growth for the fourth quarter as a whole, after a disappointing third quarter.
The strength comes as a major relief since household spending has been a weak spot in the economy as consumers struggle with sluggish wage growth and record debt levels.
"This adds to other encouraging signs, with consumer confidence bouncing back in December and the labour market continuing to fire on all cylinders," said Katie Hickie, an economist at Capital Economics.
"As such, the risks to our forecast that real consumption growth will be marooned around 2 percent this year lie on the upside," she said.
Futures markets 0#YIB; reacted by narrowing the odds of a hike in rates this year and imply around a 50-50 chance of a move by August. A rise from 1.5 percent is now fully priced in by December, instead of February next year.
Australian government bond futures slipped, with the three-year bond contract YTTc1 off 4.5 ticks at 97.805 and briefly touching its lowest since early October.
The 10-year contract YTCc1 shed 5 ticks to 97.2300, while the cash yield rose to 2.74 percent AU10YT=RR .
The New Zealand dollar NZD=D4 was having a quieter session at $0.7197, although overnight it had reached its highest since late September at $0.7230.
"The kiwi tested topside resistance overnight but has the feeling that a better run of domestic data over the next week could see this broken," said Con Williams, an economist at ANZ Bank.
The New Zealand Institute of Economic Research's quarterly survey of business is due next week along with a global auction of dairy products, New Zealand's single biggest goods export.
New Zealand government bonds 0#NZTSY= eased, sending yields 4 basis points higher towards the long end of the curve.