eFXplus DATA

• USD/JPY powers higher, registering the biggest daily rise since August 26

• Thursday's gain was a decent 72 pips, according to EBS prices

• That increases the chances of an even bigger recovery to the 110.53 Fibo

• 110.53 is 76.4% retrace of the 112.40 to 104.46 (April to August) drop

• The thick daily cloud, which spans the 107.62-108.36 region, props into 2020 We are long at 109.00 for 110.50. EUR/JPY sees a 121.37-122.58 EBS range

• USD/JPY Trading Page TGM2336. Previous update nL1N28M064

• Big election driven rally in GBP and charts now trying to settle

• Pullback risk given speed-magnitude of rise but can't ignore bull potential

• Weekly cloud and 200WMA cleared easily and now give support

• 100 and 200WMA are converging, 1.3050 and 1.3098, bull cross risk

• Looking higher and levels thin out: Session high 1.3516, 30HMA Bolli 1.3548

• Bigger levels 1.3608 May 2018 high and 1.3806 76.4% Fibo 1.4377-1.1959

  
  

• EUR/USD: 1.1120-25 (1.3BLN), 1.1135-40 (550M), 1.1150-55 (1.1BLN)

• 1.1160-70 (750M), 1.1180-85 (400M), 1.1200 (611M)

• GBP/USD: 1.3295-1.3300 (900M), 1.3400 (1.4BLN), 1.3450 (1BLN), 1.3500 (450M)

• EUR/GBP: 0.8300 (425M), 0.8350 (500M), 0.8400 (600M)

• AUD/USD: 0.6885-0.6900 (1.6BLN)

• USD/CAD: 1.3125 (500M), 1.3140-55 (1BLN), 1.3225 (210M), 1.3250-60 (730M)

• USD/JPY: 109.00 (475M), 109.50 (560M)

• Trades close to the top of a 1.3181/1.3516 range, after a hectic session

• EUR/GBP is at the base of a 0.8278/0.8426 with huge flow for Asia

• Bids at 1.3450 provided a base after initial jump - 1.3450 1BLN strikes

• Early results support the exit poll prediction of an 86 Boris landslide

• EU welcomes a strong UK mandate into upcoming trade talks nL8N28M78I

• Charts show GBP trending higher, but over stretched short term nL1N28N01Q

• Stunning Conservative victory will totally change UK politics nL8N28M6XR

• Close above 1.3453, 61.8% 2018/2019 fall a strong positive for next week

• AUD/USD traded to 0.6939 after a flood of good news sent risk higher

• Pair traded up to 0.6913 on US-China trade deal news late in US session nL1N28M1JR

• Exit poll showing resounding Conservative win sent AUD/USD to 0.6939 nL8N28M6YT

• Sellers stacked ahead of 0.6950 discouraged further buying

• AUD/USD settling around 0.6920, but sentiment remains bullish nL4N28M56D

• Former resistance at 200-day MA at 0.6910 now support and close above would be bullish

• Not much resistance ahead of the psychological 0.7000 level

  
  

• Consolidates the 2.2% bounce on a likely landslide Johnson win nL8N28M6XR

• Charts remain very positive with 5, 10 & 21 daily & wekly MAs trending north

• Trades around 1.3453, 61.8% of the 2018/2019 fall, after touching 1.3516

• Close key for next week, above 1.3453 targets 1.3806, 76.4%, 2018/19 dip

• Close below 1.3453 61.8% would leave a top in place at 1.3516

• Rising 21 day upper Bolli band at 1.3321 suggests GBP overdone short term

• Longer term the 21 day daily Bollinger bands are supportive

• EUR/USD barrels above 200 DMA resistance 1.1154 on EBS

• Positive UK election, US-China trade headline spur risk-on rally

• But sustainability of the rally depends on close above 1.1154

• Bollinger uptrend channel will also be reaffirmed; base at 1.1112

• US-China deal agreed by Trump, tariffs to be cut nL1N28M1JR

• UK PM Johnson's victory clears the air, paves way for EU trade talks

The news flow over the past 24 hours could not have been better for AUD/USD bulls.
The FOMC event was viewed as being on the dovish expectations to undermine the USD nL1N28L1GT.
The "agreed to in principle" U.S.-China trade deal exceeded expectations to give EM assets and currencies a strong lift nL1N28M1JR and the exit polls indicate the Conservative will have a resounding victory, which will lead to the long-awaited Brexit deal nL8N28M6YT.
The optimists have been proven correct on all counts and cheerful investors will likely ensure a sizable risk rally through to the end of the year.
The AUD/USD traded to a fresh five-month high above 0.6930 and there isn’t much in the way of technical resistance this side of 0.7000.
While the 200-day MA at 0.6910 holds on dips, the AUD/USD is poised to make tracks for the July 19 high at 0.7082 in the days and weeks ahead.
The RBA won’t like it if the AUD/USD rise accelerates, but they don’t meet again until February and there is unlikely to be much in the way of communication between markets and the RBA through the holiday period.

Bank of America Global Research flags a scope for USD/JPY upside through Q1 of next year on the back of strong M&A flow.

"We have estimated the average interval between an M&A announcement and completion to be about four months. December is also a seasonally strong month for M&A by Japanese corporates. It suggests Japan's outward M&A would provide support for USD/JPY through announcement impacts and flow into 1Q20," BofAN notes. 

"In fact, USD/JPY reversed its downtrend during Tokyo trading hours in August and has grinded higher, partly owning to M&A flow, in our view. Longer term, increased foreign exposure may lift volatility in the FX and equity markets around turns in the business cycle," BofA adds. 

• Pair lifts slightly in early NY; technicals encourage longs nL1N28M0JC

• Rally intensifies a bit on Trump, WSJ trade headlines nL1N28M0XX

• Global bond yields, stocks & commodities gains, USD/CNH fall buoy AUD/USD

• Rally stalls just short of 200-DMA, some gains erode as US$ buys persist

• Slight pull back sees AUD/USD near 0.6990 late, still +0.22% late in the day

• Techs are bullish, RSIs rise, t-l off Dec '18 high breaks

• Clean breaks above 200-D<a, october="" high="" should="" target="" 0.700/15,="" july's=""></a,>

GBP/USD is taking a hit as markets turn jittery over today's UK election, which could result in a Brexit under the current agreement or more uncertainty about Britain's plans to leave the EU.
Since the YouGov poll nS8N26U03B on Tuesday showed a drop in the parliamentary majority projected for the Conservative Party, sterling has fallen under the sway of alternating market interpretations.
The pound was initially hurt by the narrowing in the Tory majority forecast, then recovered on notion that a majority was still foreseen, however diminished.
The pound has reverted to losses today as results of voting are awaited.
The stakes are considerable for GBP/USD.
The market's skepticism over the size of the projected Conservative majority, current GBP/USD weakness and high overnight volatility FXVV, highlights the risks involved.
A wide Tory majority will likely boost GBP/USD near 2019 highs by 1.3380.
A slight majority or minority will likely see GBP/USD melt through support at 1.2914, the 10-WMA and eye a move toward 200-DMA support at 1.2697.
With further reversals of recent gains eyeing the October lows by 1.2200 nL1N28M0HO.

Credit Suisse summarize  how to interpret the results of today's UK elections.

"In terms of how to interpret the results, a Tory majority of 40 seats or higher would represent a validation of market expectations and would likely be consistent with additional tactical GBPUSD strength in the near-term towards the mid-March highs around 1.3340 – especially after the last minute unsettling surprise delivered via the latest polls," CS notes. 

"Conversely, vote outcomes leading to a sub-40 seat majority would prove disappointing relative to market expectations, bringing back memories of the 2017 election, and paving the way for a retreat in GBPUSD back below 1.30 towards the early November weekly lows around 1.2770," CS adds. 

• USD/JPY rallying on Trump saying very close to big deal with China

• Tweet says they want it, and so do we - broad risk-on response

• USD/JPY at highest since last Friday, clears 10-DMA

• 109 and Tenkan at 109.08 next hurdles, 110.00/52 major resistance

• Still need official word tariffs are delayed and phase one is done

• Tariff delay now highly likely so 109.73 peak should be in play

UOB discusses EUR/USD technical outlook and flags a scope for further gains in the near-term.

"EUR could advance further and take out the October’s peak of 1.1179. We highlighted the strong resistance zone between 1.1115 and 1.1130 yesterday (11 Dec, spot at 1.1090) and indicated that “a break of these key levels could lead to a rapid rise in EUR”. However, we did not anticipate the sudden break of these levels (we noted “looking ahead, if EUR were to ‘burst’ above the resistance zone mentioned above, the October’s peak of 1.1179 would likely come under threat”).

In other words, the overnight price action suggests that EUR could advance further and take out the 1.1179 level (next resistance is at 1.1200),' UOB notes. 

"On the downside, only a break of 1.1070 (‘strong support’ level) would indicate that our view is wrong," UOB adds. 

TD Research discusses its EUR tactical bias and thinks that long EUR/GBP exposure looks attractive around current levels. 

"We think the market response to the Fed follows from the outlook for the rest of the world - not just the US. The Fed has been responding to external shocks, which they feel have moved in the right direction. The shocks could arise again, but a more upbeat Fed doesn't do the USD many favors, especially for high-beta currencies," TD notes. 

"This won't offer much more upside for the EUR in the very short-run, but it should reinforce a top in the broad USD. We still think it's too early for a break higher in the EUR, given the lack of support on growth, the yield curve, and valuation. EURGBP longs, however, look more attractive as Britain heads to the ballot box. We think much good news is priced into GBP, noting a nice bump in positioning and a premium to HFFV," TD adds. 

• Cable hits 1.3151 after tripping stops on the break below 1.3180

• 1.3180 was a former resistance turned support level (Monday's high)

• Bids just shy of 1.3180 based an earlier drop from 1.3222 nL1N28M08J

• More bids expected ahead of 1.3100 (Dec 6 low) if GBP/USD extends south

• 1.3107 was the low after GBP fell on YouGov's final MRP poll Tuesday

• UK votes to decide the fate of Brexit, again nL8N28M1CDnL8N28L4Q5

• AUD/USD remains on the front-foot after its 1% rise to 0.6889 on Wednesday

• See: nL1N28L1U6. AUD/USD revisited 0.6889 (five-week high) in Asia

• High-stakes White House meeting expected to debate US-China tariffs

• See: nL1N28L2BWnL4N28M245. Outcome will impact risk-sensitive AUD

• AUD/USD could drop through 0.6868 if Trump decides to go ahead with tariffs

• 0.6868 was Asia low. HKD jumps amid stampede from USD bets nL4N28M0YD

• USD/JPY sees a narrow 108.46-65 range on Thursday, according to EBS data

• Risk sentiment holds up despite U.S-China Dec 15 trade concerns, UK election

• More on trade concerns nL4N28M245 and UK elections nL8N28M1CD

• FX traders have been buying USD/JPY for weeks now nL1N28L07X

• Triple failure under 108.49 Fibo, rising cloud, bullish nL1N28M064

• 108.49 Fibo: 23.6% of 104.46-109.73 rise. Cloud spans 107.57-108.34 region

• EUR/JPY correlation with USD/JPY high, 30/60-day logs are +0.52/+0.65

• EUR/USD overnight expiry implied vol higher now with UK election in the mix

• Was 11.0 vol/51 pips break-even Wed when first captured Fed and ECB

• It's now 12.5 vols - a break-even for the straddle of 58 USD pips

• Despite being twice a normal days average, it's still far from excessive

• It was 15.0/70 pips ahead of Sept FOMC, and 18.0/83 pips before Sept ECB

• GBP options by comparison - highs since Brexit referendum nL1N28M05G

  
  

• AUD/USD consolidates in Asia, traders wary of chasing Wednesday's 1% rally

• Some wonder if rise on Powell nixing rate hike expectations overdone

• Fed points to 'favorable' economic outlook in 2020, contrasts with dour RBA

• Rise more a function of positioning as large short positions pared back

• Trump's high stake meeting with advisers Thurs on tariffs eyed nL1N28L2BW

• Resistance 0.6888, 76.4% of Oct-Nov drop, 0.6911, 200-DMA & 0.6930 Oct high

• Support 0.6858-63 (previous highs) & 0.6840-45