AUD has had a great week despite an uncertain US election result and a super dovish RBA. So what gives?

I guess there is something to be said for the Aussie ability to sidestep political risks overseas, whether it’s the US election or UK-EU trade talks.

But the key to the Aussie bounce is Australia’s performance on the Covid-19 issue. While a winter of despair looms for Europe and the US, Australia is essentially Covid-19 free.

There is considerable interest in AUD topside as catch-up trade with Chinese Yuan, where forward points continue to narrow as spot declines.

Despite the RBA announcing QE this week, AUD is a standout winner in G10 FX in early post-US election price action. It is the currency most correlated to US equities this year, which are rallying post-election.

The AUD is also benefiting from an implied improvement in US-China relations under a Biden presidency.

Concerns about falling industrial metal prices on fading fiscal stimulus expectations do not materialise, removing another headwind for the AUD.

The Summary of Monetary Policy, released Friday, highlights domestic challenges for the economy, but global drivers matter more for the AUD for now.