Analysts downgraded their Australian:US dollar currency forecasts by 8-14% over 2013-15.

“Notably, we have not changed our commodity price forecasts as we see these having moved ahead of the currency and as a result it is the AUD’s turn to play catch-up,” Macquarie said.

“Consequently, the weaker interim AUD outlook falls directly into earnings forecasts and valuations for the local miners.”

Macquarie said it had a positive view on the sector with 60% of companies covered carrying outperform ratings against only 6% with underperform ratings.

Alacer Gold was the only company to be upgraded – from neutral to outperform – though BC Iron’s price target was upped by A35c to $4.

On average, Macquarie upgraded its company valuations by around 9% and sees the Australian mining sector trading at an average 50% discount to net asset value.

Of the majors, analysts favour BHP Billiton over Rio Tinto due to diversification.

“Indeed, persistent doubts over the iron ore price mean Rio’s large valuation discount may struggle to unwind in the current environment,” Macquarie said.

Macquarie sees average earnings for BHP, Rio and Fortescue Metals Group increase by around 13% between 2014 and 2017, while valuations only rise by around 2%.

“Indeed, we estimate FMG’s earnings rise by an average of around 23% between 2014-2017 but being on research restrictions, we cannot publish the changes to our FMG valuation,” Macquarie said.

As a result, BC is the preferred iron ore pick.

In the gold space, the top picks remain Regis Resources, Beadell Resources and Papillon Resources.

“In the current environment we prefer Regis due to its significant free cashflow generation, organic growth profile and management track record,” Macquarie said.

“While at the emerging end of the market we prefer Beadell for its production growth profile and low cost and Papillon for the quality of its project, coupled with a clearly delineated timeline to delivery of first gold.”

However, Macquarie acknowledged the gold stocks with assets in Australia would benefit most from the dollar.

Its biggest movers from an earnings perspective are Alacer, Regis, Newcrest Mining, Evolution Mining and in particular, St Barbara, which it has forecast a 290% increase in 2015 financial year adjusted earnings.

Macquarie’s key coal pick is Whitehaven Coal, though it expects both Whitehaven and Yancoal to post losses this financial year.

The key pick in the nickel space is Western Areas, while PanAust is the favoured copper producer.