AUD/USD Intermarket: Scope for rally as US equities are looking toppy

AUD/USD has no direct correlation as such with the S&P 500 index. However, in the current scenario, S&P 500 index could heavily influence gold. The yellow metal has a strong direct correlation with the Aussie dollar. 

Trump-related good news has been priced-in

US equity indices are at record highs and need a fresh catalyst. However, the markets have priced-in all the good news associated with Trump Presidency. 

Moreover, the markets are yet to price-in the risks associated with Trump Presidency. Protectionism combined with fiscal stimulus would be good for the US dollar. However, in the short-run, protectionism could yield a risk-off action in the equities/risk assets.

Consequently, gold is more likely than not to extend gains in the short-run. Thus, the Aussie dollar stands to gain further. 

AUD/USD could retreat to 0.75-0.7450 in the short-run as gold rally is stalling near $1220 levels. However, a bearish move in the S&P 500 index could yield a fresh rally in gold. In this case, AUD/USD could jump to 0.77 levels.