USD: In the green against G10

There is quite a lot to digest before UK markets open this morning and immediately on the SONIA futures open.

• Yesterday key members of the Cabinet including Chancellor Rishi Sunak and Health Secretary Sajid Javid both resigned. This very much puts PM Boris Johnson's position in jeopardy. Of course he survived a confidence vote from Conservative MPs recently and under the current rules another confidence vote cannot be held for another 11 months (12 months from the 6 June vote date). The Chair of the 1922 Committee, Sir Graham Brady, has not ruled out the rules surrounding confidence votes being changed. And it is also worth noting that former PM Theresa May survived a confidence vote but was still effectively forced out within a few months. There are some disagreements about exactly how the government should support cost of living pressures - and so any replacement PM could have different views which could have an impact on the market's view of monpol.
• A second story worth noting is the BBC's estimate that the October energy cap is likely to be above GBP3,000 (around 7% higher than estimated six weeks ago by Ofgem). This is not a shock and the calculation is freely available for anyone to do but has been making headlines again this morning.
• Finally, we have two MPC speakers this morning - first Sir John Cunliffe on BBC Radio Four at 7:30BST (some of the initial preview headlines are out where he is quoted as saying the Bank will act to make sure inflation remains under control but there are already signs of a slowing economy). He will make a second appearance this afternoon on CBDCs but the morning comments will be more worth watching. Chief Economist Huw Pill is due to give the keynote speech at the Qatar Centre for Global Banking and Finance 2022 Conference at Kings College London: "The Role of Central Banks in a Transforming World" at 9:10BST. This will also be worth watching.

• RES 4: 0.7202 High Jun 9
• RES 3: 0.7138 High Jun 10
• RES 2: 0.7069 High Jun 16 and a key short-term resistance
• RES 1: 0.6939/6964 20-day EMA / High Jun 28
• PRICE: 0.6790 @ 07:18 BST Jul 6
• SUP 1: 0.6762 Low Jul 5
• SUP 2: 0.6759, 50.0% retracement of the Mar ‘20 - Feb ‘ 21 bull cycle
• SUP 3: 0.6685 High Mar 9 2020
• SUP 4: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing

AUDUSD remains vulnerable following the recent breach of support at 0.6829, the May 12 low. The break strengthens bearish conditions and confirms a resumption of the downtrend that started February 2021. The move lower also maintains a broader bearish price sequence of lower lows and lower highs. Sights are on 0.6759 next, a Fibonacci retracement. Initial firm resistance is seen at 0.6964, high Jun 28.