EUROPEAN FISCAL: "*ITALY TO USE 0.9% EU DEFENSE BUDGET ALLOWANCE: [...]

TYU6 112.50 calls paper paid 0-05 on ~2.8K.

Gilt futures +11 at 89.01.

• Initial support and resistance located at 88.58 and 90.15, respectively.
• The pullback from recent recovery highs is still deemed corrective at this juncture, leaving bulls in technical control.
• Yields ~1bp lower across the curve.
• The shape of fiscal policy under likely next PM Burnham remains under scrutiny, with increased coverage of the idea of potential reform to council tax payable on housing and some of his economic advisors supporting the idea of a simplification of the wider tax system.
• A reminder that elongated trading hours in gilt and SONIA futures are now in action, with the contracts opening at 01:00 London and closing at 21:00 London.
• Lower tier UK data is due today, while we will also hear from BoE’s Mann.
• Mann’s preference for an “activist” stance to monetary policy making is well-defined. What’s more, she will speak at an event covering the future of UK economic data, so may not provide much on monetary policy.

• RES 4: 1.4328 1.764 proj of the Mar 9 - 31 - May 1 price swing
• RES 3: 1.4292 61.8% Retracement Feb’25 - Jan’26 downleg
• RES 2: 1.4264 1.618 proj of the Mar 9 - 31 - May 1 price swing   
• RES 1: 1.4248 High Jun 24, 25 and 30 and the bull trigger
• PRICE: 1.4217 @ 08:23 BST Jul 6
• SUP 1: 1.4150 Low Jul 2
• SUP 2: 1.4110 20-day EMA
• SUP 3: 1.3966 50-day EMA
• SUP 4: 1.3837 Low Jun 3 

USDCAD remains bullish. A recent fresh cycle high reinforced the bull theme and the move higher has paved the way for a climb towards 1.4292, the 61.8% Fibonacci retracement of the Feb ’25 - Jan ’26 downleg. Note that the trend remains in overbought territory. A stronger corrective pullback would allow this condition to unwind. On the downside, the first important support lies at 1.4110, the 20-day EMA.