The Australian dollar’s rally may peak at 80 U.S. cents this year, National Australia Bank Ltd. and Australia & New Zealand Banking Group said in research notes. The currency surged 6.6 percent over the past month against the U.S. dollar as better economic data spurred investors to return to riskier assets, driving global equity markets to nine consecutive weeks of gains. Australia’s dollar also climbed as the central bank left its benchmark rate unchanged May 5, retaining the nation’s yield advantage over the U.S. and Japan, where interest rates are close to zero. “The Australian dollar is a barometer of sentiment towards global economic growth and an indicator of appetite for cross- border investment,” wrote John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd. in Sydney. “The Australian dollar will rise to 75-80 U.S. cents by year-end.” The currency rose as high as 77.14 U.S. cents, the strongest since Oct. 6, before sliding 0.4 percent to 76.53 U.S. cents as of 11:20 a.m. in Sydney from 76.86 cents in New York May 8. It touched 76.18 yen, also the highest since October, before trading at 75.34 yen. The currency’s advance “won’t be smooth,” Kyriakopoulos wrote and will likely be driven in the second half by a recovery in China, Australia’s biggest trading partner. China’s manufacturing expanded for the first time in nine months in April, the CLSA China Purchasing Managers’ Index showed last week, spurred by the nation’s 4 trillion yuan ($586 billion) stimulus spending. Amy Auster, head of foreign-exchange and international economics research at ANZ, expects Australia’s currency to advance to 80 U.S. cents in the coming weeks, followed by a retreat toward 64 cents over the next 12 months. “We still view downside pressures dominating in the second half of this year,” wrote Auster, who is based in Melbourne, as a recovery in U.S. economic growth strengthens the greenback.

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