The Australian dollar could be trading towards parity by the first-quarter of next year amid an extended period of weakness for the US dollar, Commonwealth Bank of Australia's analysts say in a reversal of their outlook for the currency.

The bank now expects the Australian dollar to rise to US97¢ by the end of this year and to US99¢ by March 2015. CBA's currency strategists had previously expected the dollar to fall to US84¢ by December 2014 and to rise to US85¢ by the first quarter of next year.

On Friday morning, the dollar was trading at 93.29 US cents.

"We have decided to fundamentally change our US dollar view," CBA's analysts said in a note on Thursday. 

"We now do not expect the US dollar to significantly strengthen until the real Fed Funds rate turns positive in early 2016."

The revised forecasts are some of the most bullish among analysts. The median forecasts for the Australian dollar for the fourth-quarter of this year is US87¢ by the end of this year and US88¢ for March 2015.

CBA's chief currency strategist, Richard Grace, said the key factors driving the higher forecasts for the local dollar include the recent strengthening in the domestic economy, the Reserve Bank of Australia's shift to a neutral monetary policy stance and the end of the RBA's moves to "jawbone" or talk down the currency.

At the same time, Australia's terms of trade has held up better than had been expected, with CBA now only expecting a modest decline of about 1 per cent from June 2014 to July 2016.

Meanwhile, foreign buyers of Australian government bonds have picked up again in recent months as the outlook for the domestic economy improves. The Australian dollar is also expected to be supported by the continued improvement in the country's current account deficit as the trade surplus keeps expanding.

Earlier on Thursday, the Australian dollar pushed higher after a report from China raised hopes the central government would implement stimulus policies to boost economic growth.

The dollar rose from US93.64¢ to US93.92¢, its highest since Tuesday. The local currency has been partly boosted in recent weeks that the Chinese government would try to boost growth so that it would hit its 7.5 per cent GDP target for the year. It weakened slightly and was fetching US93.74¢ on Thursday afternoon.

The front-page editorial, from the official China Securities Journal, said the measures would focus on the services sector and boost growth in underdeveloped areas.

The report added that a government survey said most firms did not support "strong stimulus measures". It echoed comments by Chinese Premier Li Keqiang, who said on Thursday his country was not considering strong stimulus measures at this time.

Mr Li said growth at about 7.5 per cent would be with a reasonable range. On Wednesday, China reported that its economy had expanded by 7.4 per cent year-on-year, above consensus forecasts of 7.3 per cent.

The new data was welcomed by markets, although it was the slowest pace of growth since 2012, amid fears of slowing growth. The Chinese figures also boosted demand for the Australian dollar, which has traded as a risk proxy for the world's second largest economy.

"We had a little bit of demand for Aussie in London and New York that we can attribute to markets outside Asia taking the China report very literally. ... There was a little bit of relief in those markets," Westpac's senior currency strategist Sean Callow said.

The Australian dollar latest move upwards came as it replaced the New Zealand dollar as the best performing G10 currency against the greenback this year. The local currency has risen by 5.17 per cent against the US dollar this year.

"The three-year down-cycle in Aussie-Kiwi now is increasingly looking like it is over, and we did not get to parity after all," Mr Callow said.

"It's very notable that the Aussie is the strongest currency in the G10. It's definitely a changing of the guard as far as Aussie versus Kiwi, but ... most G10 currencies have been up against the US dollar this year."