Westpac note that "AUD has posted sharp.......>

FOREX: Westpac note that "AUD has posted sharp gains against almost all Asian

currencies over the past 3 months, including 14% against the Chinese yuan,

though it has lost momentum recently. Global risk appetite, best proxied by

major equity indices, remains the main driver of gains for the risk-sensitive

Aussie. But Australia's outperformance in Covid-19 containment has also helped,

keeping the RBA's balance sheet expansion in check. China's economic recovery

remains focused on industrial activity rather than the consumer, but such a mix

of course benefits Australia, whose iron ore exports to China underpin ongoing

trade surpluses. We believe China is on track for a robust recovery, set to

finish 2020 with growth of around 3-4% and then 5.5-6% over 2021. The yuan has

been supported by the PBoC not opting for the ultra-expansionary monetary policy

of most central banks and by global travel restrictions which shrink China's

services deficit. Policymakers are choosing currency stability over export

competitiveness. The bulk of A$ gains should be behind us, with AUD/CNY

targeting CNY4.90 end-Q3 (USD/CNY CNY7.00 and AUD/USD $0.70). But equities will

continue to spark gyrations in AUD/CNY at times."