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. Australian government bond futures slipped, with the three-year bond contract off 4.5 ticks at 97.805 and briefly touching its lowest since early October. The 10-year contract shed 5 ticks to 97.2300, while the cash yield rose to 2.74 percent.
The New Zealand dollar 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 eased, sending yields 4 basis points higher towards the long end of the curve. Sales 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.