Royal Bank of Scotland - "The AUD has ground its way gradually higher over the last three months, this has occurred despite further steady declines in its yield advantage as the RBA has cut cash rates to revisit the 2009 lows, and the market continues to predict further cuts this year, around 50bp of cuts.
(...) The prevailing sentiment is that the strength in the AUD is more permanent, but that it will struggle to rise further, already very expensive in a purchasing power parity sense. (The AUD is the most extended currency in real effective levels from its 20 year average of any currency, at almost 40% above its average).
(...) We have been forecasting a fall back to below parity in the second half of 2013. The reason is that we are leaning towards the third scenario. However, recent events have increased the likelihood of a further grind higher in the near term. We have no strong desire to buy the AUD from a strategic point of view, but are wary that it will continue to rise near term.
The near term outlook is balanced by the approaching US fiscal debt ceiling and a lack of progress on solving this problem. At this stage this appears to be as big a near term risk as the fiscal cliff was at the end of last year. The debt ceiling is hit in around a month and thus will increasingly weigh on risk appetite in coming weeks."