MUFG
2026 FX Outlook: Post-Peak USD World
LIVE19 December 2025USD bearish
Back to CurrenciesBullish
AUD/USD
Commodity tailwinds in a post-peak USD world
MUFG Forecast Path
vs Prior ForecastCurrent target: 0.7Prior target: 0.69Revision: +1.4%
Cross-Firm Forecast Comparison
Key Drivers
RBA policy
Copper/iron ore prices
China growth
Yield advantage
Pension fund flows
All Firm Targets (Dec '26)
INGVery Bullish0.7300
DBBullish0.7200
MSBullish0.7100
MUFGBullish0.7000
GSBullish0.7000
BofABullish0.7000
BARCBullish0.6900
JPMBullish0.6800
Key Issues for 2026
1.RBA on hold through 2026 makes AUD the highest yielding G10 currency
2.Copper and iron ore recovery provides terms of trade support
3.China stimulus creates meaningful upside risk for AUD
4.Part of our commodity currency overweight basket alongside NOK
5.Pension fund hedging flows provide structural AUD demand
Risk Scenarios
Bull case0.72-0.75
China major stimulus + copper rally above $12,000/t
Base case0.69-0.70
Steady commodities, RBA on hold, gradual USD weakness
Bear case0.58-0.62
China hard landing, commodity collapse, risk-off
Analysis Summary
AUD is a key beneficiary of commodity tailwinds and the post-peak USD theme. RBA on hold maintains carry appeal. China stimulus and base metals recovery provide upside catalysts. AUD/USD to reach 0.70 by year-end. Part of our commodity currency overweight basket.