UBS Australian US Dollar Q3 2026 Forecast: RBA Caution In Evidence, AUD/USD At 0.72 - Exchange Rates Org UK

What the desk is arguing

UBS argues that the RBA's cautious stance on rate cuts, amid persistent inflation and a resilient labor market, will support the Australian dollar. The bank projects AUD/USD reaching 0.72 by Q3 2026, implying significant upside from current levels near 0.64.

This forecast is underpinned by expectations that the RBA will maintain higher-for-longer rates relative to other major central banks, particularly the Fed. UBS sees this interest rate differential as a key driver for AUD appreciation over the medium term.

The desk implicitly rejects the view that the RBA will be forced to cut rates aggressively in response to a global economic slowdown. Instead, it believes Australia's commodity exports and fiscal position provide a buffer against external shocks.

Where it sits in our coverage

Our Dec26 consensus stands at 0.70, with a range from 0.68 (Barclays, JPMorgan) to 0.73 (ING). UBS's 0.72 target sits above the consensus but within the upper half of the range. It aligns with the more bullish end of our coverage, particularly ING's high-end forecast.

Specific firm targets for Dec26 include: - ING: 0.73 - Deutsche Bank: 0.72 - Morgan Stanley: 0.71 - Goldman Sachs, MUFG, BofA: 0.70 - Barclays: 0.69 - JPMorgan: 0.68

UBS's view is most closely aligned with Deutsche Bank's 0.72 target, while notably above JPMorgan and Barclays' more cautious outlooks.

How other firms see it

ING is the most bullish among our coverage, with a Dec26 target of 0.73, even above UBS's 0.72. This aligns with a similarly hawkish RBA view. Deutsche Bank also shares a similar optimistic outlook at 0.72.

On the other hand, Barclays and JPMorgan are more cautious, with Dec26 targets of 0.69 and 0.68, respectively. They likely anticipate a more dovish RBA pivot, contrasting with UBS's conviction. Goldman Sachs, MUFG, and BofA sit near the 0.70 consensus, reflecting a more neutral stance that does not fully endorse the aggressive rally UBS expects.