The Australian dollar has had quite a run, what with commodity prices going on a tear. But what's next is another story.
Think currencies just stick to tiny incremental moves? In the past year, the Australian dollar has risen 21% against its U.S. counterpart, thanks to strong commodity prices and relatively high interest rates. But where it's headed next is unclear.
Westpac, has broken ranks with the other Australian banks to forecast an interest rate cut - which would dent the dollar - before the end of the year. Bill Evans, Westpac's chief economist, is worried about the mess in Europe and waning Australian consumer confidence.
"The catalyst for that fall will initially be the turmoil in Europe," he said. "It's very, very hard to find anyone who feels that a sensible solution will be found to European probs without major, major dislocation in the financial markets." He's also concerned about weak credit growth and consumer spending.
But Adam Gilmour, co-head of FX & derivatives sales at Citi Asia Pacific, says the Australian dollar is still a buy.