A ROCKETING Australian dollar could hit close to $US1.05 next month, with signs its record-breaking run is far from over.

The dollar hit a record $US1.0294, its highest since its 1983 float, in New York trading early on Saturday morning, Melbourne time.

A weakening US dollar, stronger commodity prices particularly in raw construction materials, and relatively high interest rates compared to the rest of the developed world have fuelled the Aussie's growth. Its rise also follows investors returning to snap up riskier assets, which the Aussie is traditionally regarded as being, after concerns about Japan's nuclear crisis, triggered by an earthquake and tsunami, eased.
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AMP chief economist Shane Oliver said the past 28 years was an aberration for the Australian dollar.

He said before it began trading freely, it often traded above or around parity against the greenback and, if you made the necessary conversions, it bought $US2.40 in 1900. ''We have had it pretty easy for the past 28 years with the dollar below parity. We started to assume that was normal when quite clearly that was not the case,'' Dr Oliver said.

''Australia's economic fundamentals are also pretty good now. We have close to zero public debt and the budget deficit is under control, inflation is also under control. We are on our way to hitting $US1.05 in coming months, and my opinion is we will hit $US1.10 before the end of the year.''

ANZ's head of currency trading, Tony Allen, said he expected the Aussie to trade between $US1.0050 and $US1.0450 next month.

''How it will play out will depend a lot on how the European crisis resolves itself,'' Mr Allen said.

''If Ireland, Portugal and Greece will cause more problems for the European Union, that will have a negative effect on risk and the Australian dollar.''

But he said ANZ had forecast the Aussie to hit between $US1.06 and $US1.08 this year.

Not all estimates were that high, however. Commonwealth Bank economist Savanth Sebastian tipped the dollar to ease, falling to US92¢ before the end of the year.

''We have seen a stellar rebound in the US economy which gives the perception that we see interest rate hikes in the US in 2012,'' Mr Sebastian said.

''We expect the dollar to fall to US99¢ mid-year and then continue to ease as the US economy gains traction.''

The Australian dollar hit $US1.0294 at 2am on Saturday, before settling at 1.0252 when New York trading closed.

delage - He isn't the only analyst saying these things.

If its true - that the  "natural" state of the aud is around parity with the U$A then the big fright which no one is talking about - is that Oz exporters have not been all that efficient and will have to get a lot leaner or get used to narrower margins.

Or heaven forbid - we could actually do some value adding to our exports. We supply most of the wool to the world and almost all the superfine wool, but we supply it as a raw untouched commodity just like we do the mining extracts -we dig it up - or cut it off in the case of wool - bale it up and ship it out.

"The Economic Truth That Nobody Will Admit..."

http://robertreich.org/post/4218613020

I would say the double dip in the Britain is inevitable, based on the bloated size of the public sector and the cuts to be imposed.  The private sector is too small to pick up the slack and manufacturing ain't coming back in the medium term. 

Then there's the decisive fault line of Ireland and when the domino effect will really kick in and clear wipe away the financial sector in a year zero scenario for them. My mucca in the banking insurance world is pulling up his roots and heading to the States, he sees no real long term future here in the financial sector, his prediction is after the proverbial finally hits the fan, those in the financial sector will find themselves earning as much as primary school teachers. The final meltdown, he predicts in 2012/13. Depends how desperate the concerned parties will keep the whole shebang going after the wheels have fallen off. 

I'm not pessimistic about this anymore, lets bring it on and build a new Jerusalem after the fall.

The Telegraph editorial are always interesting, especially the comments, there's quite a few regulars who have various perspectives and some with genuine insight. Sadly, most of the ones who seem ITK bring only ill tidings.

^Holland has serious population density, but its all condensed in the South Holland area i.e. Amsterdam, the Hague and Rotterdam. Once you get out of these cities, it becomes leafy green suburbs and rich farmland/green houses. I live 15 minutes from the center of the Hague and there are bike lanes through forests, two small lakes nearby and more kids parks and ponds then you would have in the equivalent in the UK. It feels spacious, well, suburban at least. But not far away, its 'orrible and urban, but still better than the urban I've experienced in UK cities.

India has immense agricultural resources and this one of the reasons it can sustain a war against Pakistan longer than Pakistan can with India.

Either way, there's too many people and not enough easy oil to go round, someone has to loose out, unless we make the evolutionary jump into hyper-space.