**UBS Anticipates AUD/USD Surge: Targeting 0.70 by Early 2026**
*Original author: InvestingLive team (source: investinglive.com)*
The currency markets are dynamic, influenced by international economic policy, trade relationships, commodity cycles, and investor sentiment. One of the pairs drawing considerable analyst attention is the Australian Dollar (AUD) versus the US Dollar (USD), universally traded under the symbol AUD/USD. Recent analysis by UBS, a leading global financial services firm, forecasts a substantial rally for the AUD/USD pair, projecting the exchange rate could climb toward 0.70 by early 2026. This represents a bullish outlook for the Australian currency over the medium to longer term.
### UBS’s AUD/USD Outlook
UBS’s Forex strategists point to several converging factors that underpin their positive view on the Australian Dollar:
– **Economic Recovery**: Australia’s economy continues to recover from recent global shocks, including the COVID-19 pandemic and international trade disruptions. Key indicators such as employment levels, wage growth, and robust domestic consumption point to increasing economic momentum.
– **Commodity Prices**: As a primary exporter of commodities (notably iron ore, coal, liquefied natural gas, and agricultural products), Australia’s currency often moves in correlation with global commodity cycles. UBS analysts expect sustained demand from Asia, particularly China, to support higher prices for Australian exports, positively affecting the AUD.
– **Interest Rate Differentials**: Central bank policies, particularly those of the Reserve Bank of Australia (RBA) versus the US Federal Reserve, play a significant role in currency valuation. UBS projects that while the RBA has maintained a cautious stance, a bottoming out of the rate cycle and possible rate hikes in the second half of 2024 or into 2025 may lift the AUD’s relative appeal compared to a plateauing or potentially declining US interest rate environment.
– **Global Macroeconomic Factors**: UBS views signs of an improving global risk environment, which typically benefits “risk-on” currencies like the AUD. Lower market volatility and a reversal in safe-haven US dollar flows could spur increased demand for the Australian Dollar.
According to the UBS research cited by InvestingLive, these factors suggest upward pressure on the AUD/USD rate over the medium to long term, with the pair forecast to reach 0.70 by the first quarter of 2026.
### Current Market Context
As of June 2024, the AUD/USD has exhibited considerable volatility. The pair traded in the vicinity of 0.66 following a period of mixed economic data and shifting risk sentiment. Investor focus has centered on:
– Persistently high US interest rates.
– Evolving guidance from central bankers worldwide.
– Fluctuations in commodity market dynamics.
– The economic trajectory of China, Australia’s largest trading partner.
While the US dollar (USD) has retained some safe-haven status through recent years, especially in risk-off episodes, periods of global optimism have
Read more on AUD/USD trading.