The correlation between the S&P 500 and the AUD/USD remains strong and with investor confidence fading, they both are starting to look vulnerable.
Risk assets have shown resilience due to hopes the global economy will continue to rebound despite the worrying surge in COVID-19 cases in the U.S. and other parts of the world.
The strong U.S. job numbers in May and June helped fuel economic optimism, but enthusiasm is fading as the coronavirus count increases nL1N2EG13NnL1N2EG2PN.
Increasing demand for safe-haven U.S. Treasuries and gold along with dire warnings from the Federal Reserve portends faltering investor confidence.
This will likely result in a correction lower in the S&P 500 and a perceived top in place in the AUD/USD around the 0.7000 level.
A daily close below the 21-day moving average in the AUD/USD at 0.6907 would confirm a top is in place and target a move towards support at 0.6800.
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