UBS Australian Dollar To US Dollar Forecast: AUD/USD Forecasts Raised To 0.68 By End 2025 - Exchange Rates Org UK
The desk anticipates a bullish trajectory for the Australian dollar against the US dollar, projecting an increase in the AUD/USD pair to 0.68 by the end of 2025. This outlook is underpinned by UBS's recent revision of their forecasts, which reflects a more favorable view on the Australian economy and commodity prices. Per the full note from UBS, the upward adjustment is attributed to expectations of sustained demand for Australian exports and a potential stabilization in global markets.
What the desk is arguing
UBS sees the Australian dollar grinding higher toward 0.68 by end-2025, a revision from an earlier, likely more cautious forecast. The bank is leaning into expectations of a narrower Fed-RBA rate differential and a cyclical uplift in commodity demand, particularly from China's policy stimulus, which should support AUD.
Supporting this view, the RBA's relatively hawkish stance compared to the Fed—markets price only shallow rate cuts in Australia while the US easing cycle is more advanced—provides a yield advantage. Additionally, the AUD's undervaluation on a PPP basis offers a structural buffer against sharp downside.
The desk is implicitly rejecting the notion that a global growth slowdown or renewed USD strength from trade tensions will overwhelm these supportive factors. UBS appears to view the current spot level of 0.64 as a solid entry point for longs.
Where it sits in our coverage
Our median consensus targets for AUD/USD are 0.6650 by Mar26 and 0.7000 by Dec26, with UBS's 0.68 end-2025 target sitting near the low end of the near-term range. The overall firm spread is wide—from 0.64 (not shown but implied by some) to 0.73—indicating clear divergence on AUD's trajectory. UBS's call is a touch below the Mar26 median but broadly aligned with the gradual appreciation consensus.
Comparing specific firm targets for Dec26: - Goldman: 0.7000 - JPMorgan: 0.6800 - ING: 0.7300
UBS's 0.68 is closer to JPMorgan's cautious 0.68 than to Goldman's or ING's more bullish calls, suggesting UBS sees a more modest upside.
How other firms see it
ING is the most bullish, targeting 0.73 by Dec26, well above UBS's 0.68. They likely place greater weight on a sharp USD downturn and robust commodity price rally. Goldman and Morgan Stanley are moderately bullish at 0.70 and 0.71 respectively.
On the contrary side, Barclays is the most bearish with a Dec26 target of 0.69, only marginally above UBS's end-2025 call. Others like BOFA and MUFG are in the middle at 0.70. The consensus shows a bullish skew, but UBS's target is conservative relative to the median.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01UBS raises AUD/USD forecast to 0.68 by end-2025, citing narrowing rate differential and commodity demand.
- 02Our median consensus shows AUD reaching 0.70 by Dec26, with a wide 0.69-0.73 range.
- 03UBS aligns with JPMorgan's cautious .68 target but is less bullish than ING (.73) and Goldman (.70).
Market implications
The upgraded UBS forecast reinforces a bullish AUD narrative, likely encouraging further long positioning. If spot Grinds from 0.64 toward 0.68, exporters may increase hedging, while speculative accounts add to longs. A break above 0.6650 (Mar26 median) could trigger a momentum-driven move toward 0.68.
Risks to this view
Key downside risks include a resurgence in USD strength from trade policy, a sharper RBA easing cycle than priced, or a China growth miss. Upside risks: faster-than-expected Fed cuts, commodity super-cycle, or a risk-on shift from geopolitical de-escalation.
Sources & References
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