my 2 cents worth - opinion not fact!
Almost all trade is done in USD. Asia and the middle east hold Trillions of dollars in USD assets. The US is the only country that would like to see a weaker USD!
Like it or not, we are a USD world at the moment. 100 years ago it was the GBP - 2000 years ago it was the dinarius! The USD is the world's reserve currency.
Whilst I think the long term trend for the USD is downwards, markets do not move in straight lines. They tend to oscillate wildly around long term trends. When the AUD was 47c no one on TV said it was good value and would climb to 92c within 5-7 years! Likewise no one now is predicting its fall. The catalyst for the 10cent fall(AUD) a couple of months ago was credit concerns over the sub prime market in the US - something Australia has no exposure to. The flight to quality at the time was out of the commodity currencies and back into the USD - so the USD isn't dead yet!
Australia's trade balance has been in deficit for the last 6 years. Now, a deficit on terms of trade is not necessarily a bad thing. It shows the country is investing lots of money in future productive capacity. But with commodity prices 200% higher now than they were 5 years ago, you have to wonder when Australia will finally achieve a Trade Surplus! The stronger AUD just encourages more imports and overseas travel.
So like 404 I am betting on a significantly stronger USD vis a vis AUD, in 2-3 years.