It's completely broken down. When the AUDJPY fell in sync with the stock market that usually signified that there was a market move from risky to safe haven assets. Lately, even though the AUDJPY has fallen and stayed flat, the stock market has rebounded strongly and threatens to rise higher.
What does this all mean?
1. SPX is more resilient meaning that it offers the best return. With falling it is creating a bubble where the fundamentals and risks don't match the price. The AUDJPY represents the true level of fear in the market.
2. The AUD and Aussie bonds is less attractive with the RBA dropping rates, political and economic uncertainty. Commodity prices are still low.
3. The stock market isn't as bad as the negative sentiment going around. Market is correctly priced.
4. Short squeezing. Meaning that short sellers are closing their trades or hedging.
5. Bargain hunters. Traders believe that the drops represent profitable opportunities.
It's probably a combination of all these factors, but what I really believe mostly is happening is that foreign buyers, such as those in Asia, specifically China and Japan (who have no faith in their own markets), and European investors where euro stocks are much riskier, are pumping their money into the American stocks. This is creating, certainly imbalances that can only be solved wen Americans start participating in their own markets. When Americans start investing more strongly in their own markets, the Fed will likely raise rates. When they raise rates, there will certainly be a period of but this will just be an era of rebalancing. In any case, I believe that the market must go down before it goes back up.