BofA sees AUD upside on copper strength and rate outlook

Bank of America rolled out a new AUD model that sets fair value at 0.7240 (about 1% above the 0.7185 spot on April 29, 2026) and a constructive year‑end target of 0.74. The model adds an export‑price commodity index, the three‑year yield spread and a copper‑to‑S&P 500 ratio as a proxy for global growth versus U.S. outperformance — a variable BofA says better captures recent AUD moves. The bank highlights upside risks for the AUD including potential RBA/Fed policy divergence, a U.S.‑China trade deal and higher superannuation hedge ratios. BofA argues that periods when commodities outperform U.S. equities tend to support the AUD, making copper strength and the copper/S&P 500 ratio key market indicators for AUD direction. Overall the note is a bullish institutional outlook for AUD, providing a framework for traders amid headline‑driven volatility.