Chopping over a shy 78-point range, raw sugar futures finished up on a positive note last week. Largely led by funds reducing record net short positions, the fundamental backdrop remains somewhat muted. Price action was highlighted by a surge in the final hours on Friday night as the index roll period wound down with the Oct17 options expiry also in play. The latest Commitment of Traders report highlighted another reduction of the net short position held by specs, to 92,000 net. Looking ahead, this week we see the latest UNICA report for 1H September. Many will be looking at the sugar mix, given a dip in the most recent report. Whether this is as material as they believe will soon be known.
Despite a down-trending week, the AUD maintained an USD 0.80 handle in to the week end. Stronger USD on clarity around Fed balance sheet normalisation has ensured the USD is well supported. Local employment data continues to outperform, though AUD appreciation stalled on some weaker Chinese data. Looking ahead this week, we see the RBA meeting minutes and FOMC as key market drivers. Key supporting commentary will be watched for indications of the Fed’s intention to begin balance sheet normalisation.