Bullish indicating open at $55-$60, IPO prices at $37
UBS provided insights into the Australian dollar’s trajectory against the US dollar, citing a combination of factors that could contribute to its appreciation over the next year.
The firm pointed to a dovish rate environment and the potential for better-than-expected economic growth in Australia and China as key drivers that may push the AUD/USD higher.
UBS’s analysis suggests that current market levels have already factored in the risks of a deeper trade conflict between the United States and China.
Despite these concerns, UBS believes that the likelihood of fewer interest rate cuts, coupled with the possibility of upside surprises to growth in Australia and China, could bolster the Australian dollar against its US counterpart.
The financial services firm also expressed a favorable view on going long on the AUD/NZD, recommending a position that benefits from the Australian dollar strengthening against the New Zealand dollar.
Additionally, UBS advised selling downside price risks in the AUD/USD, AUD/EUR (Australian dollar against the Euro), and AUD/CAD (Australian dollar against the Canadian dollar).
However, UBS also acknowledged that US tariffs pose a significant risk to their outlook. They cautioned that new tariffs could temporarily depress the AUD/USD pair below the 0.60 level. This serves as a reminder of the ongoing sensitivity of currency markets to trade policy and geopolitical tensions.
The analysis by UBS offers a perspective on the potential movements of the Australian dollar, reflecting broader economic expectations and market strategies in response to global economic conditions.
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