AUD/JPY Intermarket: VIX reverses spike, Will the pair recover losses?

AUD/JPY, a global risk barometer, dropped from 87.10 (Mar 21 high) to 83.82 (Mar 28 low) during the recent bout of risk aversion in the financial markets. During the same time period, the S&P 500 VIX index rose from 10.9 to 15.1. 

However, the risk reset seen over the last few days saw the VIX tumble from 15.1 to 11.00. The AUD/JPY pair has recovered from the low of 83.82 as well; however, it is at least 200 pips short of the March 21 high of 87.10. 

Read - How the VIX correlates to the S&P 500

The decline in the VIX suggests the markets have not really lost confidence in the Trump Presidency and that could keep the risk assets well bid. Hence, it would not be a surprise if the AUD/JPY cross extends revisits 87.00 levels, although the Aussie remains vulnerable to a potential sell-off in gold, copper and iron ore.