CANBERRA -- China's economic strength is the most likely driver of the Australian dollar to achieve parity with the US dollar again by the end of this year, local economists said.

The Australian dollar was at 96.44 US cents on Monday, which has benefited from expectations the US Federal Reserve will keep a full dose of stimulus flowing into the world's biggest economy into 2014. The US dollar is at an eight-month low.

Deutsche Bank currency strategist John Horner has a 98 US cents forecast for the currency by year-end and would not rule out a $1 valuation at some point in the fourth quarter. Deutsche also has an above-consensus Chinese growth forecast for 2014.

"When we look at what caused the weakness through the middle months of this year it was really three factors, one was the Reserve Bank of Australia's easing cycle and clear easing bias through that period. The second one was the Chinese data and the third was the Fed tapering of its bond purchases story," said Horner.

"One US dollar is certainly possible, above $1, we would think the Aussie would struggle to sustain moves above that sort of level given it would likely have some sentiment impacts on the economy here, and also may potentially have impact in terms of the RBA policy outlook," he said.

The RBA has struggled with trying to defeat the currency's appreciation in an environment of exceptionally loose monetary policy coming not just from the US Fed but the Bank of Japan and the Bank of England.

The RBA has certainly become more neutral in its rhetoric, said Horner, but is unlikely to shift to a more hawkish tone which would typically result in a higher Australian dollar.

"That by default leaves the China data the most obvious driver of any Aussie strength," Horner said.

China's economy expanded by 7.8 percent in the third quarter, official data confirmed last week, in-line with economists' expectations.

Not all economists are counting on better data out of China; Nomura takes the view that the Chinese recovery ended in September and growth will slow in 2014.

National Australian Bank (NAB) economist Robert Henderson said the dollar is unlikely to get much higher.

"There are plenty of sellers above 95 US cents so the currency's initial strength this morning could be capped if that level is broken," he said.

Magellan Flagship Fund portfolio manager Chris Mackay urged investors to be cautious about the current strength of the Australian dollar, pointing out that the local currency remained overvalued.

Mackay, former chairman of UBS in Australia, believes the Australian dollar remained too expensive despite falling against the greenback in recent months.

"We continue to urge patience and caution regarding currency, but our views remain firm regarding the fundamental overvaluation of the Australian dollar," Mackay said.

He said the company believed the probability of "a sustained correction" increased further over the past 12 months.

Mackay expects the Australian dollar to trade materially lower for at least part of the next decade, according to his letter to shareholders in the group's annual 2013 report.