The Australian-US-Dollar rate fell below 0.70 after the RBA hike, while ING kept its December recovery forecast and warned of greater near-term downside risk.
The Australian Dollar to US Dollar (AUD/USD) exchange rate fell despite Tuesday’s interest-rate rise, as the RBA’s admission that it had considered holding policy steady overshadowed the increase to 4.60%.
AUD/USD traded around 0.6974 on Tuesday afternoon, down 0.59% from Monday’s close and roughly 2% below its level a week earlier.
The 25-basis-point increase delivered the September move Goldman had anticipated, but Governor Michele Bullock’s comments raised doubts about how quickly another hike might follow.
ING identified the reasons for considering a pause:
“Governor Michele Bullock said policymakers considered holding rates today, given risks to the housing market and a potentially slower global economy due to the Middle East conflict.”
ING nevertheless retained its December forecast of 0.720, explaining why Australian rates alone cannot deliver that recovery:
“Our call for AUD/USD at 0.720 in December has always relied heavily on the USD softening into year-end and easing global liquidity conditions.”
That target requires a gain of around 3.2% from Tuesday’s snapshot.
Goldman’s forecasts, published before the RBA decision, put AUD/USD at 0.72 in three months, 0.73 in six months and 0.74 in twelve months.
UBS’s pre-decision projections are more cautious initially, with 0.70 for December 2026, followed by 0.71 in March 2027, 0.72 in June and 0.73 in September.
The banks therefore envisage different recovery speeds, with UBS allowing little improvement before year-end.
ING’s assessment after the decision preserves the longer-term argument while acknowledging that the immediate outlook has deteriorated:
“AUD’s fundamentals remain solid, and this hike supports them further, so we remain confident that in that USD-bearish scenario into year-end, AUD would be an outperformer. But clearly, global conditions have worsened, and near-term downside risks have increased for AUD/USD.”
Our currency coverage draws on live market data, official economic releases and published bank research.
