**UBS Forecasts AUD/USD Rally with a Target of 0.70 by Early 2026**
*Original author: InvestingLive News Desk*
—
The foreign exchange market continues to see shifts amid global economic uncertainty. Recently, leading investment bank UBS set a bullish outlook for the Australian Dollar against the US Dollar (AUD/USD), with a specific target of 0.70 by early 2026. According to an article by the InvestingLive News Desk, UBS analysts are confident that a confluence of macroeconomic factors, commodity trends, and central bank policies will drive the AUD higher over the next two years. This comprehensive analysis will explain UBS’s rationale and provide broader market context, including comments from other forex analysts and recent macroeconomic developments affecting the currency pair.
### UBS’s Bullish Outlook on the AUD/USD
UBS strategists have identified several key reasons behind their optimistic forecast for the Australian Dollar:
– **Resilient Australian Economy:** UBS analysts note that Australia’s economic fundamentals remain robust, characterized by steady employment, moderate inflation, and healthy domestic demand. Despite cyclical headwinds, the country’s economic framework supports growth.
– **Commodity Price Support:** Australia is a major commodity exporter, particularly of iron ore, coal, and natural gas. With commodity prices expected to remain elevated on the back of structural changes in global demand and ongoing supply constraints, UBS sees continuing support for Australian terms of trade.
– **Reserve Bank of Australia (RBA) Policy:** While markets expect the Reserve Bank of Australia to maintain a cautious stance with rate adjustments, any signs of tightening or less dovish guidance could offer additional tailwinds for the AUD.
– **Softening US Dollar:** UBS expects the USD to weaken broadly on a multi-year basis as the Federal Reserve pivots away from aggressive tightening, leading to a narrowing of yield differentials between the greenback and other major currencies.
### Detailed Analysis of Macro Drivers
#### 1. **Australian Economic Resilience**
Australia’s economy has shown its capacity to weather global shocks. According to recent data from the Australian Bureau of Statistics:
– **Unemployment Rate:** The national unemployment rate has remained below 4.5 percent for several quarters, supporting consumer confidence and spending.
– **GDP Growth:** While GDP expansion has decelerated somewhat in 2023 and 2024 due to global headwinds, Australia continues to post positive quarterly growth figures. Sectors such as mining, services, and agriculture form a diversified base.
– **Inflation Trends:** After peaking in 2022, Australian consumer price inflation has moderated, allowing the RBA to manage rate policy more flexibly. UBS expects further moderation, which would benefit currency stability.
#### 2. **Commodity Market Tailwinds**
The Australian Dollar is historically regarded as a ‘commodity currency’, highly sensitive to trends in key export prices. UBS strategists highlight several factors:
– **China’s Commodity Demand:** Despite slower overall economic growth, China remains the world’s largest buyer of
Read more on AUD/USD trading.