THE MARKET is abuzz with talk the Australian dollar is about to reach parity with the US currency. But even if the "Aussie battler" breaks through the $US1 mark, there are reasons to believe it will not stay there for long,
The Australian Financial Review reports today.
Many analysts believe the picture drawn for the $A is a little too rosy, speculation about the greenback's death is premature and talk of parity could be setting up the $A for a fall.
"It's pretty much a uniform view at the moment that investors don't like US dollars and love Aussie dollars," JPMorgan chief economist Stephen Walters said. "And the risk is, if everyone has the same view, perhaps the market is a bit stretched.
"I think we are in a long-term trend towards a higher Aussie dollar, on average, but that doesn't mean the average is above parity. The average is probably closer to US80¢."
Consensus forecasts can be very wrong. The last time the market was using the "parity" catchcry was in the middle of 2008, when the local dollar cracked US98¢ before crashing. In that free fall, market pundits predicted US50¢ but the $A hit a trough near US60¢.
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