We're a AAA rated country, other crap economies push their money our way making our dollar stay high
The three largest economies whose currencies are used as reserves (US$, YEN and Euro) are undertaking some form of quantitative easing or the other
Isn't that sufficient to explain the strength in the AUD? If the US is committed to as much QE3 as is required, which pushes up commodities in USD, don't you expect a strong AUD in response?
If commodities fall sharply, it will probably signal even heavier QE, countering part of the downside risk.
I agree the downside risk is greater, but it's hard to see sharp falls back to 2007 levels, as since that time Australia has done well, US has not, and has printed a heap of money to boot. So for what reason would we close back to former levels, circa 70c? Sure markets are forward looking, but the US would have to be expected to significantly outperform Australia for the mid term, and it's hard to see that eventuating.
