Raw sugar futures have seesawed over the past month. Chopping up to 15 USc/lb on macro USD weakness, prices have retraced all gains in the last two weeks. USD weakness revitalized sugar and other commodities, albeit for a short period of time. Petrobras cut gasoline prices, whilst the Brazilian Government managed to pass on a fuel tax, seeing ethanol parity near 13.50 USc/lb. Sugar fundamentals have remained unaccommodating in the meantime. The latest UNICA report was released as expected, with dry weather enabling more efficient harvesting. The monsoon in India and Thailand continues well, as a focus on a return to surplus appears imminent coming into the second half of the year. Looking ahead, an influx of sugar will weigh down trade flows with any rally in the near term difficult to sustain.
Despite three weeks of losses, the AUD continues to grasp at USD 0.79. A bout of USD weakness on Trump concerns and softer than expected economic data, saw the AUD surge to a USD 0.8064 high. The July RBA meeting spun markets as comments around a need for neutral policy rates at 3.5 per cent, given the stronger AUD. RBA speakers have since played down any mention of a rate hike or higher neutral rates in the near term. Topside momentum has slowed for the AUD as it continues to chop lower. Further RBA speakers this week, paired with economic data, should see the AUD hold a USD 0.7850–0.7950 range. RBA speakers will be monitored for further guidance on currency strength, whilst we watch for guidance on the Fed’s hiking cycle.