Bank of America
FX Outlook 2026: Structural Dollar Headwinds
LIVE5 December 2025USD bearish
Back to CurrenciesBullish
AUD/USD
Commodity and carry tailwinds
BofA Forecast Path
Cross-Firm Forecast Comparison
Key Drivers
RBA policy
Commodity demand
China outlook
Pension hedging
Credit cycle
All Firm Targets (Dec '26)
INGVery Bullish0.7300
DBBullish0.7200
MSBullish0.7100
BofABullish0.7000
GSBullish0.7000
MUFGBullish0.7000
BARCBullish0.6900
JPMBullish0.6800
Key Issues for 2026
1.RBA higher for longer provides carry advantage
2.Green transition metals demand structural positive
3.China stabilization reduces downside risk
4.Pension fund hedging flows supportive
5.Credit cycle extension supports domestic demand
Analysis Summary
AUD benefits from the RBA's higher-for-longer rate stance, keeping it as a relative high yielder in G10. Commodity demand from green transition and China stabilization provide fundamental support. Technical setup is constructive.