**Australian Dollar to US Dollar Outlook: ING Predicts AUD/USD to Hit 0.68 by Q4 2025**
*Based on analysis from Francesco Pesole, Foreign Exchange Strategist at ING, combined with additional market perspectives.*
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The Australian Dollar (AUD) has often been viewed as a key indicator for risk sentiment in global markets, largely due to its ties with commodity prices and the Chinese economy. Against the US Dollar (USD), the AUD has faced several headwinds and tailwinds influenced by central bank decisions, global economic trends, and domestic data releases. ING’s recent forecast projects a gradual appreciation in the AUD/USD pair, aiming for a level of 0.68 by the fourth quarter of 2025. Below is an in-depth look at the reasoning, market drivers, and potential implications of such a move, combined with insights from additional reputable sources.
## Recent Performance and Background
– The AUD/USD pair has endured a tumultuous ride over the past few years, as a result of both local and international economic fluctuations.
– The pair has oscillated between optimism due to strong commodity prices and bouts of weakness, stemming from global risk aversion and more aggressive monetary tightening from the Federal Reserve compared to the Reserve Bank of Australia (RBA).
– The trading range has reflected the push and pull between these forces, with the AUD at times struggling to gain sustainable traction against a strong US Dollar.
## ING’s Forecast: AUD/USD to Reach 0.68 in Q4 2025
ING, a prominent global bank, has forecasted the AUD/USD to appreciate gradually and reach 0.68 by the end of Q4 2025. The bank’s analysis points to a convergence of multiple factors that could contribute to this trend:
**Key Drivers Identified by ING:**
– **Commodity Prices:** Australia benefits from exports of commodities such as iron ore, coal, and liquefied natural gas. While prices have been volatile, ING expects them to remain elevated by historical standards, offering support to the AUD.
– **Global Risk Sentiment:** The AUD is considered sensitive to shifts in global risk sentiment due to Australia’s open economy. Improving global growth prospects, particularly in the Asia-Pacific region, are anticipated to favor appreciation.
– **China’s Economic Recovery:** China is Australia’s largest trading partner. Any sustained recovery in the Chinese economy, particularly in manufacturing and construction, will likely boost demand for Australian exports, thereby supporting the Australian Dollar.
– **Shift in US Federal Reserve Policy:** ING anticipates the US Federal Reserve to enter an easing cycle in 2025, possibly narrowing the interest rate differential between the USD and AUD. This scenario would reduce support for the USD and favor AUD appreciation.
– **Reserve Bank of Australia’s Approach:** While the RBA has been cautious, any hints toward tighter monetary policy or at least maintaining rates as US policy eases could bolster the AUD.
**ING’s Quarterly AUD/USD Projections:**
– Q1 2025:
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