WTI discovers support near $80 ahead of Fed policy
- WTI attempts recovery from $80.50 in hopes that the Fed will keep interest rates unchanged.
- The US Dollar Index gathers strength to extend recovery ahead of Fed policy, US labor, and factory data.
- Oil prices managed to recover despite weak Caixin Manufacturing PMI data.
West Texas Intermediate (WTI), futures on NYMEX, find bets near $80.50 on expectations that the Federal Reserve (Fed) will keep interest rates unchanged in the range of 5.25-5.50%. The Fed is widely to keep policy steady due to a gradual decline in consumer inflation and higher US long-term bond yields, which are impacting business investment and overall spending.
Considering the strength in the US economy due to robust consumer spending, strong labor market conditions, and a potential recovery in factory activities, the Fed would keep doors open for further policy tightening.
The US Dollar Index (DXY) gathers strength to extend recovery toward the crucial resistance of 107.00 Apart from the Fed’s monetary policy, the US Dollar would face volatility after the release of the private payrolls data and the ISM Manufacturing PMI for October.
Meanwhile, deepening Middle East tensions have also improved the oil demand. The Israeli army is planning a ground attack in Gaza to dismantle Palestine's military troops. Israel seems not in the mood for a ceasefire against Hamas and the likelihood of Iran’s intervention is high.
The oil price managed to recover despite weak Caixin Manufacturing PMI data for October. S&P Global reported that China’s factory activities unexpectedly dropped in the contraction zone to 49.5 against expectations of 50.8 and the former reading of 50.6. This has elevated global slowdown fears.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
