The Australian dollar has rocketed to its highest level this year, prompting speculation that it is poised to surge through US 95 cents.
The news came as the Australian share market hit a five-and-a-half year high, buoyed by Woolworth SA’s surprise $2.15 billion bid for David Jones.
The local currency was trading at around 93.8 US cents this afternoon, after reaching a fresh high for 2014 in trading international trading overnight.
Easy Forex currency dealer Tony Darvall said that positive local economic data, combined with US dollar weakness caused by recent jobs figures, had fuelled the rally.
“The US dollar has been quite weak, on the back of those non-farm payrolls,” he said.
“We’ve had some supportive local data, positive home loan figures and the Westpac consumer confidence report also showed a little bounce today, so that’s allowing the trend to continue.
“The Aussie usually does grind higher until there’s a reason to fall.”
Not so long ago, many analysts were predicting that the Australian dollar would collapse to 66 US cents next year.
The local currency, however, has defied the critics in recent weeks.
Jim Vrondas, chief currency strategist at Sydney-based foreign exchange company OzForex, forecast that the Australian dollar higher still had further to climb – for the time being, at least.
“I’m not convinced we’ll reach parity [with the US dollar], but I think we’ll take 95 cents out,” he said.
“Longer term, the Aussie dollar still has room to go down.”
On the share market, The S&P/ASX 200 rose 53.2 points, or nearly one per cent, to 5463.8 points to close at a five-and-a-half year high.
Shares in David Jones had jumped 73 cents, or 23 per cent, to $3.92 in response to the Woolworths SA’s recommended $4.00 cash per share offer.
Myer shares were up 12 cents or nearly 6 per cent to $2.42.
Outside the retail sector, shares were higher across the board.
Resources stocks were a stand-out performer as mining companies gained a boost from the falling US dollar.