$A higher on better retail sales THE Australian dollar is higher following the release of better than expected retail sales figures. At 1200 AEDT on Tuesday, the currency was trading at 102.14 US cents, up from 101.25 US cents on Monday afternoon. The Australian dollar dropped to an eight-month low of 101.16 US cents on Monday before recovering overnight amid gains on US stock markets. OzForex chief currency strategist Jim Vrondas said the Australian dollar received a further boost from better-than-expected retail trade figures at 1130 AEDT. Figures released by the Australian Bureau of statistics on Tuesday show retail spending rose 0.9 per cent in January, after three months of decline in the sector. "Those numbers came in better than expected and that gave the Aussie dollar a bit of a boost," he said. Mr Vrondas said the key driver for the currency on Tuesday afternoon would be the Reserve Bank of Australia's monthly interest rate decision at 1430 AEDT. The RBA is expected to keep the cash rate on hold at three per cent, but Mr Vrondas said traders would be looking closely at the accompanying statement for signs of the RBA's future intentions. "We're of the view that they might not be as dovish as the market expects, so we could see the Aussie dollar squeeze higher and maybe push back to 102.50 US cents," he said. Meanwhile, Australian bond futures were weaker at noon. At 1200 AEDT on Tuesday, the March 10-year bond futures contract was trading at 96.715 (implying a yield of 3.285 per cent), down from 96.750 (3.250 per cent) on Monday. The March three-year bond futures contract was at 97.250 (2.650 per cent), down from 97.310 (2.690 per cent).