Westpac has announced that Australian dollar shall reach its peak early next year. It has become the first bank to announce that the exchange rate for the Australian dollar vs. the US dollar shall reach 1.01 by early 2009.

Westpac’s predictions are the strongest amongst all other retail banks in Australia. It also estimated that it would take 6.5% increase to move the dollar to parity. Australian Dollar’s gain had been average 12% since past 5 years. According to Global head of Westpac, Bill Evans, the Australian Dollar shall peak above its parity in March 2009. It would hit US 96 cents in December this year itself. Currently, Australian Dollar is trading at 95 cents against the US Dollar.

"In the context of regular volatility in the Australian dollar, a 6.5 per cent move from current levels would be quite unremarkable," said Mr. Evans. "For the last five years the currency has averaged a 12 per cent gain," he added.

Mr. Evans also quoted that weakening US economy is one of the major contributing factors for strengthening of Australian Dollar. Commodity prices have also boosted the strength of Australian Dollar. Prices of gold and oil had also jumped over night which led to strengthening of the currency. Moreover, the demand in prices of coal and steel would also further escalate the demand for the Australian currency.

Westpac is amongst the four major banks in Australia and has been the first bank to claim the strengthening of currency. Mr. Gibbs from ABN Amro Australia also quoted that they are expecting a good run and the market is long.

Inflation has been on rise in Australia and Reserve Bank of Australia had raised its concerns over the same. However, it left the interest rates unchanged at 7.2%. It also kept the official cash rate also on hold for the second consecutive month.

Financial experts at Suncorp see a possible fall in the Australian dollar by approximately 10% against the Japanese Yen this year, and the forecasted slow in economic growth and the central bank ending its rate increases doesn’t help much.

According to Suncorp, investors should consider selling Australian currency they might have now. According to Peter Pontikis, treasury strategist with Suncorp Metway, the Australian dollar will go as low as 85 yen, which is the lowest it has been since 96.

Peter Pontikis said, “For the next one or two quarters, the Aussie’s fundamentals will look very soggy,” as he believes that there has been a shift back in favor of the yen.

A government report recently showed the nations deficit as growing to a record high in February, and consumer confidence has recently dropped as well, this has caused Australia’s sixth largest bank to extend the year’s percent loss of 3.1% against the yen.

Financial analysts estimate that the currency will fall again in April after a report from the Reserve Bank of Australia put fort a statement that the inflation rate would fall back from a 16 year high, due to the economic growth slow down. This means that the central bank will probably not add to its four quarter point increase from last August.

The Credit Suisse Group index says that the current RBA will remain unchanged with its 7.25% benchmark interest rate, and will remain unchanged for the next 12 months.

The loss on the Australian dollar may not reach higher levels because of the belief that interest rates will still be able to interest investors, and that there will remain a global demand for the nations commodities, this being the consensus of the Macquarie Group Ltd, Australia’s largest publicly traded investment bank. According to Joanne Masters, a currency strategist for Macquarie, “The Australian dollar “is one of the standout investments in terms of currency markets,'” “We expect continued outperformance against the crosses.”

Australia’s 6.75% interest rate has made it a sturdy carry trade. A carry trade is where investors by funds in a country that has low borrowing costs and then invest in one with higher interest rates, but the risk they take is that when the currency market fluctuates by too much those profits will be gone.

Still, Pontikis from Suncorp-Metway says that the Australian currency has been very volatile for the last year and believes that it will continue to weaken against the yen. Investors are now discouraged from carry trades, because of the currency fluctuation. Pontikis has said, “You don't buy and hold the Aussie-yen any more, that world ended the middle of last year when you had 20-figure moves up and down, and that carried through into this quarter.”

The Australian Dollar has risen to its highest level in 24 years and the NZ Dollar has made its third weekly advance against the US Dollar on rising speculation of a wider interest rate advantage over the US. The AUD and the NZD are amongst the top five performing currencies against the US Dollar, with the Australian Dollar rising in forex trading for seven straight days which is its longest streak since April. The Australian Dollar has risen a total of 6.1 percent this month, the second best out of the 16 most traded currencies.

''There is a strong argument for the Australian dollar to go higher,'' said Greg Gibbs, a currency strategist at ABN Amro Holding NV in Sydney. ``The yield advantage is dramatic.''

US Federal Reserve Chairman, Ben Bernanke, has indicated that the US Federal Reserve is ready to further cut its three percent borrowing rate in order to stimulate its weakening economy. A further interest rate cut will widen the interest rate differential between other central banks such as the Reserve Bank of Australia (RBA). The RBA is currently adopting a contractionary response due to rising inflation, therefore also assisting in the widening of the country's interest rate differential with the US. It is highly likely to raise interest rates when they meet in the 4th of March to 7.25 percent. This has certainly helped the Australian Dollar rise along with the NZ Dollar as investors using the currency carry trade investment. NZ also has a relatively high benchmark, currently at 8.25 percent.

In forex trading, the Australian Dollar has risen to a 24 year high against the US Dollar, trading to a high of 94.98 US cents, the most since March 1984, before trading at 94.66 cents later during the Sydney afternoon. The Australian Dollar traded at 94.12 the previous day. The currency traded at 99.19 against the Japanese Yen from 100.24. The NZ dollar traded at 81.53 US cents, from 81.40 US cents yesterday. It has risen 1 percent against the US Dollar this week. The currency traded at 85.49 Japanese Yen, compared with 86.70 Yen yesterday. The rising Australian Dollar may continue its trend in forex trading, providing that its inflation continues to rise alongside a weakening US economy.

The Australian Dollar rose to a 3 month high, being heavily supported by the expectation of another rate rise next month by the Reserve Bank of Australia. It has also been supported by the falling US economy, which is expected to continue its expansionary approach by cutting its interest rates, thus increasing the interest rate differential between the two countries. Traders have also resumed the carry trade in which they borrowed money from Japan and invested it in a country with a higher rate differential such as Australia or New Zealand.

''The Aussie will continue being supported by very hawkish expectations for the Reserve Bank of Australia. We fully expect a rate hike in March and then again in May,'' said RBC Capital Markets senior currency strategist, Sue Trinh.

In forex trading, the Australian Dollar has risen to a 3 month high at 92.72 US cents compared to yesterday's 92.44 US cents. It hit a 3 month high of 92.74 US cents, the highest since November. Australian Dollar traded at 62.60 Euros, up from 62.41 Euros.

The Australian Dollar has risen to its second weekly gain on further speculation that the interest rate advantage the Australia has over the US will increase, increasing the demand for higher yielding assets. Alongside the New Zealand Dollar, the rising Australian Dollar is being supported as investors speculate on an interest rate cut by the US Federal Reserve by half a percent to 2.5 percent. On the other hand, investors are optimistic that the Reserve Bank of Australia (RBA) will raise interest rates by a quarter of a percent to 7.25 percent next month.

''The yield spread is working in favor of the Australian dollar,'' said Matthew Johnson,a senior economist in Sydney at ICAP Australia Ltd, a unit of the world's largest inter-bank broker.

''People are anticipating it to widen further,'' which will push the Australian currency higher.

If rates go higher, the rising Australian and New Zealand Dollars will be popular for investors seeking out the currency carry trade, where you borrow money from a country with low borrowing costs then invest in another country with higher rates. The Australian Dollar has been popular in recent years for the carry trade investment.

In forex trading, the Australian Dollar has risen to 91.95 US cents, in Sydney compared to a previous Asian trade of 91.80 US cents. The Australian Dollar had risen to 92.37 US cents on February 20, the highest in three months. The Australian Dollar also rose against the Japanese Yen, trading at 98.83 Yen from 99.26 Yen yesterday and 98.02 yen last week.

The Australian Dollar has risen to a 3-month high on speculation of another interest rate hike due to rising inflation. The Australian Dollar's rise was the best among the major currencies during this past month due to speculation of rising inflation and growth. A government report this week may show the lowest unemployment rate since 1974 is adding to signs wage increases may further rise. Investors have ignored the slowing global economy to buy the rising Australian Dollar to benefit from the biggest government bond yield advantage over US Treasuries in 17 years. The nation's two-year government bonds yield 5 percentage points more than similar maturity Treasury notes, near the 5.03 points reached last week, the widest gap since 1990.

''Tomorrow we get a speech from Assistant Governor Edey and Wednesday we get some very important labor data,'' said Tony Morriss, a currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney.

''Those events should lend some support to the Aussie in terms of the interest-rate outlook.''

The Australian Dollar has risen to a 3-month high in forex trading, climbing to 91.26 U.S. cents, the highest since the 9th of November, before trading at 91.18 cents. The Reserve Bank of Australia (RBA) is expected to increase its interest rates by 25 basis points to 7.25 percent when they meet on the 4th of March. It will be the fourth increase in eight months.

The Australian Dollar finished higher in forex trading today despite trading in a very tight range. The Australian Dollar was higher after being boosted by the release of the unemployment rate by the Australian Bureau of Statistics stating that it has fallen to 4.1 percent, seasonally adjusted, adding to the speculation of another interest rate hike by the Reserve Bank of Australia (RBA) next month. Concerns were raised about the US economy after Federal Reserve chairman Ben Bernanke indicated further cuts to US interest rates overnight. ''The FOMC will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,'' Dr Bernanke said. Easy Forex senior dealer Francisco Solar said the Australian dollar was trading in a ''very definable range''.

The Australian Dollar was higher in forex trading today despite trading earlier in a tight range. It traded at 90.42 US cents which is up from yesterday's 90.20 US cents. Mr Solar said the trend was still for the Australian dollar to go higher, given the possibility of not just one but two further interest rate rises in the coming months alongside future Fed rate cuts which will widen the interest rate differential further between the two nations. Australia's current interest rate is at 7 percent, currently a 12-year high. Their high borrowing rates has made it a popular choice for the carry trade investment.

The Australian Dollar has fallen, breaking a three day rise due to increased concern that the slowing US economy will reduce Australian commodity exports and reduce local consumer demand. The Australian Dollar fell after the Reserve Bank of San Francisco President, Janet Yellen mentioned that the weak US economy many continue throughout 2009. Alongside this, the Australian Dollar also fell further after the release of the consumer confidence index, revealing a negative in February for the first time in 15 months. ''I'm not overly bullish on the Australian dollar,'' said Jim Vrondas, manager of corporate business at online foreign- exchange dealer OzForex Ltd. in Sydney. ''It will be hard work for it to get back to its highs as the global slowdown accelerates.''

Despite this, the Australian Dollar holds a wide interest rate differential over the US, making it more attractive to investors who want to perform the carry trade from Japan. The Reserve Bank of Australia added a 25 basis point increase recently to hit a 12 year high of 7 percent. The US added to the AUD's advantage by cutting their borrowing rates by 125 basis points last month.

In forex trading, the Australian Dollar fell at 90.45 US cents compared to a previous trade of 90.50 US cents. The Australian Dollar fall can be attributed to its sensitivity to expectations on global growth as exports of its commodities and resources contribute up to 17 percent of gross domestic product (GDP).

The Australian Dollar is higher, trading at its peak level in a week as investors were enticed to the nation's government bonds, offering the widest yield margin over US Treasuries since December 1990. The yield gap between Australian and US two-year benchmark government bonds has doubled the past three months to 4.86 percentage points, the highest in 17 years. Investors also found the Australian Dollar alluring as the Reserve Bank of Australia (RBA) mentioned that it is likely to raise borrowing rate again from an 11 year high in order to stop inflation from going out of control.''The Australian dollar continues to stand out given its rate spreads,'' said David Watt, a senior currency strategist at RBC Capital Markets in Toronto.

In forex trading, the Australian Dollar is higher as it traded to 90.59 US cents before trading at 90.45 US cents. The Australian Dollar is higher, also due to the fact of its widening interest rate differential against the US Dollar with the US Federal Reserve slashing its borrowing rate by 125 basis points last month. Another rate rise may also add to the falling appeal of the carry trade, which has been unwinded recently due to jitters in the world's financial markets.