ING lifts AUD/USD target to 0.71 as it backs a 25bp RBA hike next week
As ING raises its short-term AUD/USD target to 0.71, aligning with expectations for a 25bp hike from the RBA on November 3, the currency's trajectory hinges on domestic yields and inflationary pressures. Per the full note, the bank anticipates a rise in the cash rate to 4.85%, citing recent CPI data that supports a stronger tightening bias. However, obstacles linger with a hawkish Federal Reserve likely capping AUD/USD upside, suggesting limited recovery potential this quarter. This contrasts with broader expectations, where consensus targets hover around 0.70, framed by various institutional forecasts.
What the desk is arguing
The desk posits that the Australian dollar is poised for a rally towards 0.71 against the US dollar, driven by expectations of an RBA rate hike. Per the full note, ING expects that a successful hike next week will be pivotal for maintaining momentum, as much of the AUD's recent strength is tied to the evolving rate outlook.
Supporting this view, market pricing suggests around 20bp of tightening has been built into upcoming Australian yields, with headline CPI reported at 4.3% y/y, driven primarily by fuel costs. This reinforces the argument that any deviation from expected rate hikes—especially a hold—could significantly pressure the AUD.
Where it sits in our coverage
Our consensus sits at 0.70 with a range from 0.6600 to 0.7300, with specific targets such as Rabobank and Nomura both forecasting a Dec-26 target of 0.7200. Notably, Scotiabank holds a more bullish view, with forecasts suggesting levels around 0.7268 as early as March 2026.
This view aligns closely with ING's upward revision but suggests room for optimism that exceeds the current consensus, positioning ING's target at the upper end of observed forecasts while others, like BofA and RBC, remain more conservative at 0.6700.
How other firms see it
Several firms align with ING's bullish outlook for the AUD, notably Rabobank and Nomura, both anticipating the currency's potential to rebound amid rising rates. Conversely, firms like BofA and RBC present a more bearish stance, with targets well below the consensus, indicating skepticism regarding the RBA's appetite for aggressive tightening.
Looking ahead, keep an eye on cross-currency interactions, especially how the EUR/USD and NZD/USD pairs may reflect sentiment around the RBA's decisions and the Fed's ongoing monetary policy shifts. Additionally, fluctuations in commodity prices, particularly oil, will also play a crucial role in shaping the Australian dollar's outlook.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01ING forecasts AUD/USD target revision to 0.71, backed by expected RBA action.
- 02Potential rate hike to 4.85% hinges on inflation pressures, primarily from fuel costs.
- 03Despite positive outlook, external factors, especially a hawkish Fed, may limit upside.
Market implications
Traders should monitor AUD/USD around 0.71 for significant volatility, especially as the RBA decision unfolds. A push above this level might confirm the bullish outlook, but anything short of expectations could provoke heavy selling. Keeping an eye on inflation readings and Fed communications will be crucial in the coming weeks.
Risks to this view
The primary risk to the bullish AUD/USD outlook is a surprise hold from the RBA, which could sharply adjust forecasts downward and weaken the currency. Additionally, if the Fed adopts a more aggressive tightening path than currently anticipated, it would place further downward pressure on the Aussie.
AUD/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Morgan Stanley | Bullish | 0.7100 |
Standard Chartered | Bullish | 0.7500 |
Westpac | Bullish | 0.7200 |
Front-end Australian yields look most exposed to next week’s decision, with roughly 5bp of hike pricing still to close if the RBA moves. A hold would likely hit the Australian dollar hard, given how much of its October strength rests on rate expectations. Oil is a key driver: further gains in crude would add to fuel-led inflation and reinforce the tightening bias, while a sustained pullback could ease pressure on the RBA.
The Fed’s stance remains the main external constraint on AUD/USD. --- Earlier: RBA set for fifth 2026 hike to 4.85% as banks flag risk of another move in February --- ING likes the Aussie’s yield and expects the RBA to add to it next week, but sees the Fed standing between AUD/USD and 0.72. Summary: ING raised its short-term AUD/USD target to 0.71, but doesn’t expect a return to 0.72 this quarter It says the Australian dollar offers the best volatility-adjusted short-term carry in G10 ING expects a 25bp RBA hike on 3 November, taking the cash rate to 4.85%, against about 20bp priced Headline CPI hit 4.3% y/y in September, driven almost entirely by fuel-related transport costs Goods and services inflation are both above 4%, and core inflation accelerated A hawkish Fed is expected to keep supporting the US dollar, limiting AUD gains ING has raised its short-term forecast for the Australian dollar to 0.71 against the US dollar, citing the currency’s strong October and its attractive yield advantage. The bank does not expect AUD/USD to climb back to 0.72 this quarter, however, as a hawkish Federal Reserve keeps supporting the greenback.
The upgrade rests on ING’s view that the Reserve Bank of Australia will raise its cash rate by 25 basis points at its 3 November meeting, rather than waiting until December. That would lift the cash rate to 4.85%. The bank had previously pencilled in a hike at some point in the fourth quarter, and now sees the latest inflation data as strong enough to bring the move forward.
Markets are pricing around 20 basis points of tightening for next week, slightly short of a full hike. ING said AUD/USD is driven mainly by short-term interest rate differentials. It added that the Australian dollar currently offers the best short-term carry in the G10 once volatility is taken into account.
Carry refers to the return investors earn from holding a higher-yielding currency, and a further RBA hike would widen that advantage. The inflation backdrop supports the case. Headline consumer prices rose 4.3% from a year earlier in September, with inflation picking up by about 90 basis points between July and September, based on the latest monthly figures and the third-quarter report.
Almost all of that increase came from transport costs, largely reflecting higher fuel prices. ING noted that goods and services inflation are both now running above 4%, a sign that energy costs are spreading more widely through the economy. Core inflation also accelerated on both annual and quarterly measures.
Sources & References
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Cross-firm research
AUD/USD Consensus Check: Spot at 0.7049, Median Target 0.70 — Week of October 29, 2026
AUD/USD trades at 0.7049, 0.69% above the 25-firm median Dec-26 target of 0.70, with an 0.08 spread separating StanChart's 0.75 bull case from Citi's 0.67 floor.
AUD/USD at 0.7054: Consensus Targets 0.70 by Dec-2026
AUD/USD trades 0.77% above the 25-firm Dec-2026 consensus of 0.70, with an 0.08 spread separating StanChart's 0.75 bull case from Citi's 0.67 floor.
AUD/USD Consensus Check: 0.70 Median Target, Week of October 28, 2026
AUD/USD trades at 0.7033 with 25-firm consensus pinned at 0.70 for Dec-26, but an 0.08 dispersion range flags meaningful disagreement beneath the neutral headline.