The Australian dollar has jumped above the US77¢ level it's been stuck at over the past months, benefiting from the surge in investor sentiment as markets became more confident of a Hillary Clinton victory in the US presidential election.
The Aussie rose as high as US77.29¢ against its US counterpart despite the greenback lifting against a basket of currencies.
Global risk appetite got a boost after the FBI early on Monday confirmed that no criminal charges were forthcoming in an investigation into Hillary Clinton's use of a private email server when she was Secretary of State, buoying her chances to win the election.
"The Australian dollar has benefited from the boost in risk appetite as the VIX (volatility) index dropped from 22.5 on Friday to 18.67 currently and commodities have also posted decent gains," said NAB currency strategist Rodrigo Catril.
Unlike other occasions over the past months when the Aussie dropped back below US77¢ almost immediately after breaching that level, the currency was hanging onto the overnight gains on Tuesday morning, trading at US77.22¢.
That could bode well for further gains, should Ms Clinton win the US election tomorrow, said ThinkMarkets senior market analyst Matt Simpson.
"AUD/USD took little notice of the FBI investigation until it was over, suggesting we could see a bullish breakout if Clinton is victorious tomorrow," he said. "A break of US77.34¢ will send it to a three-month high and leaves potential to test a 2016 high."
The Aussie rose as high as US78.35¢ in April. Since August the currency has been trading in a relatively narrow corridor between US74.5¢ and US77.5¢, despite big gains in key commodity prices such as coking coal and iron, which have pushed up Australia's terms of trade.
The tailwinds from rising commodity prices as well as lowered expectations of another Reserve Bank rate cut have been offset by growing expectations of a US rate rise, which have boosted the greenback.
HC Securities CEO Mark Lennox noted that a victory by Hillary Clinton was likely to clear the path for a tightening by the US central bank, which in turn could once again prevent a push higher by the Aussie.
"The only thing standing in the way of the Australian dollar moving higher with commodities is a potential Clinton win as the US Federal Reserve will likely raise rates in December," he said.