Intraday Analysis – WTI finds momentum
The Australian dollar drifted lower as August’s inflation reading came out in line with expectations. The pair has remained under pressure after it fell below the daily support of 0.6500. Two subsequent rebounds have turned south in that newly formed supply zone, suggesting that the path of least resistance is down. A drop below the recent bottom of 0.6360 would make the aussie vulnerable to a new round of sell-off, with last November’s low of 0.6280 as a possible target. 0.6390 is the first resistance in case of a bounce.
WTI crude soared as a sharp drawdown in US inventory fuelled concerns about tight global supplies. The double bottom at 88.50 over the 20-day SMA has proved to be a robust support. A close back above 91.20, a support-turned-resistance that previously capped last week’s rebound, confirmed that the bulls have made their way back. A break above the recent peak of 92.50 and probably sellers’ last stronghold may extend the rally to 95.00. 92.30 is the immediate support as the RSI shot into the overbought area.
The S&P 500 prints red as surging bond yields amid hawkish Fed talks take toll on risk assets. Sentiment has turned sour after the index fell below the August low of 4350. Its failure to prevent lower lows indicates a lack of buying interest. 4200 at the base of a bullish extension in June is a key level to see if the price action would stabilise or it might be exposed to more downside, potentially opening the door to 4100s. 4340 would be the first hurdle to clear to ease the downward pressure with 4400 as a ceiling further up.