The Australian dollar hit a 23-year high Monday as stronger-than-expected U.S. jobs data eased fears for the U.S. economy.
But analysts remain divided on future direction for the currency, with an uncertain global economic outlook and concerns over the credit crisis still hovering in the background.
Early in the Asian session, the local unit spiked over the US$0.90 mark, its highest level since 1984. The Australian dollar is now within ten cents of parity with the U.S. dollar, which would be a first for the currency since it was floated in 1983.
While the near term trend is upward, the gains cannot be sustained, said John Horner, a currency strategist with Deutsche Bank.
"It's supported by expectations of resilience of global growth and the return to favor for high risk," Horner said. "In the more medium term we remain cautious though about the outlook, given ... more widespread signs of slowing economies, not just in U.S."
Horner isn't predicting parity with the U.S. dollar.
The local currency has been volatile since the global credit crisis erupted in August, but it has now fully retraced heavy losses incurred during the peak of the squeeze, when it dipped below US$0.7700.
The Australian currency was trading at US$0.8800 in late July.