GLOBAL: UKMTO Gets Report Of Incident Off Oman

• RES 4: $109.57 - 2.236 proj of the Jul 2 - 23 - Aug 5 price swing
• RES 3: $107.10 - 76.4% retracement of the Mar - Jul bear (cont)
• RES 2: $105.61 - 2.000 proj of the Jul 2 - 23 - Aug 5 price swing
• RES 1: $101.69 - High Sep 15 and the bull trigger
• PRICE: $93.98 @ 07:22 BST Sep 29
• SUP 1: $88.67 - Low Sep 22   
• SUP 2: $86.79 - 50-day EMA 
• SUP 3: $72.05 - Low Aug 5 and a key support 
• SUP 4: $67.09 - Low Jul 2 and the bear trigger

The trend condition in WTI futures remains bullish and recent weakness appears corrective - for now. MA studies are in a bull-mode position, highlighting a dominant uptrend. Last week’s initial move down resulted in a breach of the 20-day EMA, at $91.82. The next key support to watch is $86.79, the 50-day EMA. A clear break of it would undermine the bull theme. Key resistance and the bull trigger is unchanged at $101.69, the Sep 15 high.

• RES 4: $4434.7 - High Sep 10
• RES 3: $4399.6 - High Sep 18  
• RES 2: $4328.1 - 50-day EMA
• RES 1: $4235.6 - Low Sep 16  
• PRICE: $4143.7 @ 07:29 BST Sep 29
• SUP 1: $4111.0 - Low Sep 28   
• SUP 2: $4065.6 - Low Aug 5
• SUP 3: $3996.1 - Low Jul 29
• SUP 4: $3943.3 - Low Jun 30 low and a key medium-term support

A sharp sell-off yesterday in Gold reinforces bearish conditions and highlights an acceleration of the bear leg that started on Aug 25. The metal has pierced $4121.1, the 76.4% retracement of the Jun 30 - Aug 25 bull leg. A clear break of this retracement point would strengthen the downtrend and signal scope for an extension towards $3943.3, the Jun 30 low and a key medium-term support. Initial firm resistance to watch is $4328.1, the 50-day EMA.

Governor Bullock put the emphasis on domestic capacity pressures driving inflation pressures and thus today’s hike with higher fuel prices from the Middle East energy shock in addition to this cause. She reiterated that tighter financial conditions are needed as inflation is too high and upside risks are “materialising”. Bullock was clear that the Board will increase rates again if that’s what is needed to slow inflation. She noted that it has been outside target for most of the last 6 years. 

• The RBA believes that monetary policy is “a bit restrictive” based on numerous measures, which markets interpreted as a reason not to tighten further. This is based on rates at top of estimated “neutral” range, scheduled mortgage payments/disposable income up to around 10% and housing slowing. Bullock believes policy is restrictive but not sure by how much, which will be signalled by how much inflation slows.
• The Board discussed a hold, due to downside growth risks from housing and overseas, and a 25bp hike. It decided on the latter as risks from the Middle East had materialised and upside risks from the AI boom and capacity pressures are building. The latter was seen as greater than previously thought given evidence from elevated inflation/ULC as well as stabilisation in labour lead indicators after moderating. So, price pressures could persist longer than expected, therefore the RBA tightened.
• When asked about Wednesday’s August CPI, Bullock noted that it is the past and that the Board is hoping its four 2026 hikes will be enough to bring inflation to target. Even the three increases from H1 are still feeding through the economy as it takes 12-18 months.
• The focus is on quarterly CPI printing around 0.6% q/q 6-months ahead rather than 0.8-1.0%.
• The RBA is concerned the longer the Middle East conflict keeps certain costs elevated, then the greater the probability they will be passed onto customers, especially sectors with excess demand, and that inflation expectations will rise. The shock has last longer than expected without an imminent resolution but was not the only reason for September’s hike but it is making things “worse”.
• A recession or stagflation are not in the RBA’s baseline at the moment. However, demand growth needs to slow as supply-side growth remains lacklustre.