A technical squeeze was halted by allegations of bribery against Brazil President, Temer. The BRL collapsed, causing a flurry of Brazilian producer pricing to market. Despite recovering the losses made the next night, sugar hit another stop as China announced an additional import tariff of 50% on imports above quota. Since, raw sugar futures have struggled to maintain a 16 cent handle, settling below 16 cents overnight. Weather concerns in Brazil will remain overshadowed by political instability over the coming weeks. The latest Commitment of Traders report showed specs at net 27,000 lots short. Expectations that this will have increased given the macro influences captured in this week’s report.
The AUD grinding higher over the week on USD and Trump weakness. US politics drove price action with concerns that recent allegations could undermine, Congress likelihood to push Trump’s proposed fiscal policies and reforms. Locally, we saw strong employment numbers which aided the AUD leg up. Overnight, Moody’s downgraded China’s long-term sovereign rating on the expectation of further erosion of China’s financial strength. AUD weakness short-lived as the FOMC meeting minutes suggested a June rate hike may not occur. Today we have the OPEC meeting were officials are expected to extend a supply cut for a further 9 months. Largely priced in by markets, risk remains if the announcement holds different to expectations.