Australian dollar may hit US85c

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The Australian dollar is taking a rest today after breaking through the US80c mark again last Friday and some analysts predict that the bull trend could continue and US85c is not out of the question.

At 10.31am (GMT) the Aussie dollar was trading at US79.69c, slightly down from US79.82c at close of trading last Friday.

Over the last 3 weeks, the Aussie dollar has gained more than 5 percent against its US counterpart and while some predict that a selloff is imminent, others believe that there are still further gains to come as the market is underestimating the current strength of the Australian economy,

"I keep talking to people who are so bearish on Australia and they're blind to the actual numbers coming out," said Greg Gibbs, head of Amplifying Global FX Capital.

 "The market's not particularly long the currency and dismissive of some fairly positive data coming out of Australia." He added.

Mr Gibbs also noted that people were underestimating the current economic and political situation in the US, which could come to the forefront at any time and cause investors to further dump the US dollar.

“You've got [Janet] Yellen last week, the inflation numbers are horrible, then you've got the politics side of it and that could really become a kicker for the US dollar. The market confidence around the politics could fall over as soon as the market feels that rate rises aren't really on the agenda," Mr Gibbs added.

The Australian dollar may face some volatility tomorrow with the release of the latest interest rate decision from the RBA followed by a monetary press conference.

No Changes are expected but the following monetary statement will be of particular interest to investors as there are concerns the current level of the Australian dollar is affecting industries such as exports, which is the backbone of the economy.

Even if the RBA takes a dovish stance and talks down the Aussie dollar it may not be enough to halt the rise.

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