ING cuts year-end AUD/USD target to 0.72 but sees an RBA hike blocking a retest of June lows
At a Glance
Per the full ING note surfaced by Eamonn Sheridan, the desk has trimmed its year-end AUD/USD target to 0.72 while flagging that a September RBA hike to 4.60% should keep the pair clear of a retest of its June lows. The core argument is that with the 25bp move already in the price, the next leg for AUD hinges on whether Governor Bullock keeps November open, which in turn leans on oil and the fuel pass-through channel — ING cites RBA estimates that a 10% fuel-price rise adds more than 0.3pp to headline inflation. Against that, ING concedes the global bond selloff and US Treasury yields above 5.2% remain a structural headwind for the Aussie regardless of the RBA outcome. Our internal consensus sits lower, with a median Dec-26 target of 0.71 and a wide 0.66–0.73 range, while ING at 0.73 sits at the top of the table alongside UBS. With no high-impact events in the next 30 days, the trade is a slow-burn carry-and-rates story rather than an event-driven one.
Key Takeaways
- 01ING trims year-end AUD/USD to 0.72 but argues the RBA's 25bp hike to 4.60% blocks a retest of the June lows.
- 02The desk's upside case rests on trimmed mean inflation holding at 3.6% and a 10% fuel-price rise adding more than 0.3pp to headline CPI.
- 03ING's Dec-26 0.7300 target sits at the very top of our tracked range (0.6600–0.7300), well above the 0.7100 median and opposed by Barclays and Danske at 0.6900.
- 04Treasury yields above 5.2% remain the structural headwind that keeps ING from chasing a stronger AUD call despite the hawkish RBA.
Full Analysis
What the desk is arguing
Per the full note , ING's thesis is a single declarative call: the RBA's September hike to 4.60% gives a bruised Australian dollar support, but not a clear run, and the year-end AUD/USD target is trimmed to 0.72 rather than abandoned. The desk frames the hike as a hawkish one on sticky inflation and a resilient labour market, which is why it sees the June lows as protected despite the broader USD bid.
The supporting evidence is explicit and quotable. ING points to a tight labour market, an upside surprise in Q2 GDP, and stronger inflation readings — with trimmed mean inflation expected to have held at 3.6% in August — and leaning on RBA estimates that a 10% rise in fuel prices adds more than 0.3pp to headline inflation. It also flags the US-Iran escalation as the swing factor, since Australia relies on imported diesel, petrol, and jet fuel, so any Iran diplomacy headline feeds directly into the RBA's inflation worry.
The alternative read the desk is implicitly rejecting is a retest of the June lows. That would require a hawkish RBA that is already fully priced plus a renewed crude-oil escalation, and ING treats both as risks rather than the base case.
Where it sits in our coverage
Our consensus median for Dec-26 AUD/USD sits at 0.7100, with a wide 0.6600–0.7300 range across tracked firms. ING's 0.7300 print is at the very top of that band, matched only by UBS, while nomura at 0.7200, westpac and rabobank at 0.7200 sit just below.
The bears are clustered lower and much further from ING's view: barclays at 0.6900, danskebank at 0.6900, hsbc at 0.7000, rbc at 0.7000, and mufg at 0.7000 all imply the Aussie gives back ground into year-end rather than holding the RBA-supported bid ING describes. On the shorter Mar-26 horizon, ING's 0.7300 also sits at the top of the range, versus a 0.6800 median, which tells you the desk is running a structurally stronger AUD view than the street at every tenor we track.
How other firms see it
Aligned with ING's constructive AUD bias are ubs at 0.7300 and nomura at 0.7200, both of which share the view that RBA stickiness plus a softer USD second half can lift the pair. Our own published work on the AUD/USD RBA rate path — see the September 28 consensus check — lands at a 0.7100 median, which is directionally with ING but with materially less upside.
The contrary camp is led by barclays and danskebank at 0.6900 and mufg at 0.7000, all of whom implicitly treat the RBA hike as a peak rather than a platform. The cross-pair spillover to watch is EUR/USD, where the ECB-Fed divergence story intersects the same global bond selloff ING cites as the AUD headwind, and USD/JPY, where Treasury yields above 5.2% and the BoJ normalization path are the cleanest expression of the rate theme driving the dollar leg of AUD/USD.
What the calendar says
No high-impact Australian events sit on our 30-day calendar, so the next genuine catalyst is the RBA communication itself and the oil tape, both of which are headline-driven rather than scheduled. That means AUD/USD traders should lean on Treasury yield moves and crude as the real-time proxies for the ING thesis rather than waiting for a domestic data print.
Market Implications
Watch 0.7200 as the level ING effectively needs to defend into year-end, with 0.7056 spot leaving roughly 150 pips of upside to the trimmed target. The cleanest real-time signals are crude oil headlines on Iran diplomacy and US 10-year yields holding above 5.2% — neither is on our 30-day calendar, so tape-watching beats event-trading here. AUD/JPY and AUD/USD versus EUR/USD will show whether the RBA-supportive bid is idiosyncratic or just a dollar-leg story.
AUD/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bearish | 0.7120 |
Bank of America | Bullish | 0.7000 |
Rabobank | Bullish | 0.7200 |
From the original
With most of the hike already in the price, the Australian dollar reaction is likely to hinge on the RBA's statement and Governor Bullock's press conference, especially on whether November stays open. Oil is the swing factor behind that question, because fuel pass-through is a ce
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