UBS Stays Bullish on Australian Dollar After This Week's Central Bank Hold Decision

11:16 AM EDT, 10/01/2025 (MT Newswires) -- The Reserve Bank of Australia held its cash rate at 3.6% this week, as widely expected, said UBS.

The press release struck a slightly hawkish tone as it highlighted stronger data on growth and inflation, while RBA Governor Michele Bullock surprisingly kept a dovish tilt in the press conference, wrote the bank in a note to clients.

UBS retains its view of a 25bps cut in November, but acknowledges that Tuesday's events raise the hurdle to another RBA cut this year.

Jobs data have been more mixed lately, particularly with employment growth softening in the most recent release.

Upcoming labor data -- due on Oct. 16 -- and Q3 consumer price index -- due on Oct. 29 -- are key inputs for in assessing the bank's rates view before the RBA's next meeting on Nov. 4.

Overall, these events are part of the reason UBS has maintained a bullish view on the AUD/USD pair, where the bank continues to target 0.70 or above over 12 months.

Other reasons UBS is positive on the Australian dollar (AUD) include a better-than-expected federal government fiscal position and its broadening acceptance among investors

as a US dollar (USD) diversifier, with relatively low direct exposure to United States tariffs and ongoing geopolitical risks -- unlike Europe.

A deterioration in U.S.-China trade talks is a major risk to the bank's view.

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