The Australian dollar has rocketed in the past week, and on Thursday reached above 75 US cents - its the highest level in more than a month.
Commonwealth Bank of Australia chief currency strategist Richard Grace says the nation's booming economy is behind the gains.
"We have strong evidence the Australian economy is doing well," he said.
First quarter gross domestic product grew at the fastest pace in more than three years, and the jobless rate continues to drift lower, he said.
Since solid growth figures were released last Wednesday, the currency has lifted 4.4 per cent from 71.90 US cents.
A recovery in commodities is the second factor, with crude oil prices now above $50 per barrel and iron ore prices rising, Mr Grace said.
That feeds into an improvement in Australia's terms of trade - export prices divided by import prices - which helps guide the currency higher.
"The fall in the terms of trade over the last few years is stopping, so we don't have contraction of income," Mr Grace said.
The final driver is the greenback, which has been licking its wounds near four-week lows after disappointing US jobs data quashed expectations of a Fed rate hike in the next couple of months.
"If you wind the clock back to when the Australian dollar was at 78 US cents (in late April) and remember what caused it to fall down to 71 US cents, it was almost the reverse of what we have now," Mr Grace said.
But CBA thinks the party may be over for the soaring Aussie.
"We're looking for 73 US cents by the end of June, and year-end," he said.
"What we need now to push it any higher is fresh information coming from global factors, or here in Australia, and we're unlikely to get that this week."
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