Street Calls of the Week
Investing.com - UBS has revised its AUD/NZD exchange rate forecast upward to 1.1400 for end-2025 and 1.1200 for end-2026, citing multiple factors strengthening the Australian dollar’s position.
The Swiss banking giant points to stronger domestic data in Australia, a rally in precious metals prices, and a more bullish tactical outlook for the Chinese yuan (CNH) as key drivers behind the Australian dollar’s recent performance.
UBS analysts note these favorable conditions could trigger an unwinding of short positions in the Australian dollar, particularly from real money accounts that have maintained bearish stances on the currency according to Commodity Futures Trading Commission (CFTC) data.
The bank also highlights significant room for Australian Superannuation funds to increase their foreign exchange hedge ratios toward historical averages, potentially providing additional support for the Australian dollar.
For the New Zealand dollar, UBS cites weak economic data that has prompted its economists to expect a larger interest rate cut from the Reserve Bank of New Zealand, reinforcing the New Zealand currency’s sharp decline in relative carry rankings.
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