Analysts increase forecasts for Aussie

Australian dollar reached today the record maximum at 1.0852 as the CPI data showed that inflation rate increased by 1.6% in the final 3 months of 2010 from the previous quarter, making the biggest advance since 2006. As a result, the expectations of the Reserve Bank of Australia’s rate hike have strengthened.
In addition, Aussie benefited from the speculation that US FOMC will keep the interest rates at the minimal 0%-0.25% levels.
Analysts at Bank of America Merrill Lynch think that Aussie may add more in the short term. In their view, the market doesn’t have much rate rises priced in at least for the next few months.
Specialists at Ueda Harlow think that the pair AUD/USD may strengthen to $1.10. Economists at Commonwealth Bank of Australia raised their forecast for the Australian dollar. The analysts now expect Aussie to climb to $1.12 by the end of September, before declining to $1.04 at year-end. Earlier the bank projected that the pair will decline to 0.9400 by the end of September.
According to the Credit Suisse Group AG index based on swaps, the RBA will lift up the borrowing by 26 basis points in the next 12 months.

Chart. H4 AUD/USD