Aug. 30 (Bloomberg) -- The Australian dollar may gain on speculation a government report today will show retail sales rose a second month in July, adding to signs the central bank will raise interest rates a third time this year.

The currency traded at 76.43 U.S. cents as of 8:22 a.m. in Sydney from 76.33 cents in late Asian trading yesterday. Against the New Zealand dollar it bought NZ$1.1863 from NZ$1.1873.

Reserve Bank of Australia Governor Ian Macfarlane said Aug. 18 the overnight cash rate target was more likely to rise than fall as two increases this year haven't crimped spending or slowed inflation. A rise in retail sales may spur buying of Australia's currency against that of the U.S., where the Federal Reserve has signaled it may be done raising borrowing costs.

``Retail sales should be supportive for the Australian dollar,'' said John Horner, a currency strategist at Deutsche Bank AG in Sydney. ``The currency could potentially move toward 77 cents.''

Retail sales probably rose 0.5 percent in July after gaining 1 percent in June, according to the median forecast of 26 economists surveyed by Bloomberg News. The Bureau of Statistics releases its report at 11:30 a.m. in Sydney.

The Reserve Bank of Australia raised the overnight cash rate target by a quarter percentage point in both May and August, taking the benchmark rate to a 5 1/2-year high of 6 percent. By comparison, the Fed's key rate is 5.25 percent.

To contact the reporter on this story: Chris Young in Sydney at cyoung12@bloomberg.net .

http://www.bloomberg.com/apps/news?pid=20601081&sid=aIIWvf76zhto&refer=australia

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