By Rob Samson

While the Australian dollar (AUD) has enjoyed a strong run over the course of the past week we note that analysts at Barclays continue to forecast lower levels in the Aus exchange rate.

Chinese Trade data surprised to the upside sending the Aus dollar higher early in today's session. The news served to quell concerns about an economic slowdown in world's second largest economy.

Chinese Trade printed at 31.9B vs. 24.2B with both exports and imports rising by 10%.

A look at the exchange rate markets shows:

The pound sterling to Australian dollar exchange rate is 0.67 pct higher at 1.8330.The euro to Australian dollar exchange rate is 0.38 pct lower 1.5033.The Australian dollar to US dollar exchange rate is flat at 0.9037.BE AWARE: All AUD quotes are taken from the wholesale inter-bank markets. Your bank will affix a spread to the rate at their discretion when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.

Can China continue to sustain the higher Australian dollar?

Today's Australian dollar strength is a function of 1) The view that the RBA won't ease policy this year and 2) Strong Chinese economic data.

But, will China continue to support the Aus dollar in 2014? Probably note says David Fernandez at Barclays:

"China’s growth rebalancing and the increased supply in bulk commodities bode ill for the AUD. At the same time, concerns about China’s growth have risen, amid rising financial sector risks. Meanwhile, we maintain our conviction on a strong USD this year, as loose monetary policy in the US is gradually normalised."

Australian dollar exchange rate forecasts from Barclays

In light of the above view, find below are the current Australian dollar to US dollar exchange rate forecasts held at Barclays:

Q3 13: 0.93Q4 13: 0.89Q1 14F: 0.88Q2 14F: 0.84Q3 14F: 0.82Q4 14F: 0.80

Why has the Australian dollar strengthened as of late, and will it last?

The Australian dollar has rallied of late after the Reserve Bank dropped its weak easing bias at its February board meeting and adopted forward guidance for the first time, noting that “a period of stability in the policy rate is likely”.

"The commitment to keep the cash rate steady at a record low of 2.5% was conditional on the bank’s current economic outlook, where it revised higher its forecast profile for both growth and inflation," says Kieran Davies at Barclays.

But, an improving Australian dollar exchange rate could prove to be its own worst enemy, because the Australian exchange rate really does matter to the RBA.

"The exchange rate matters because the bank thinks a lower currency would be helpful in helping the economy rebalance away from the mining sector. As such, the commitment to keeping rates low likely also depends on the exchange rate staying low and preferably resuming its downward trend towards the Governor’s preferred level of 85 US cents," says Davies.

So expect Australian dollar gains to taper off as markets get nervous of any verbal intervention by the RBA.