A rather quiet week for raw sugar futures, trading over a 90-point range to finish largely unchanged. Price action was highlighted on Wednesday by a rejection of the Brazilian Government’s recent pis/cofin tax and another gasoline price hike by Petrobras. Prices quickly traded above 14 USC/lb in response, before spurring a move higher near 14.65 the following night. The latest UNICA report was released, indicating all numbers higher than on a year-on-year basis. Weather remains dry in Brazil with some rain forecast later this week. Elsewhere, the monsoon in India continues.
The USD remains on the back foot, following political uncertainty and mixed economic data last week. The AUD took its opportunity above 80 cents tracking to a USD 0.8066 high before closing the week near USD 0.7985. Locally, inflation data was soft and RBA Governor Lowe perceived to have a more dovish tone during his speech. In the near term, the AUD will remain at the mercy of a USD theme that continues to pave the way for price action. This week we see the US non-farm payrolls, local trade balances, retail sales data and the RBA meeting as key drivers. Expect the RBA to remain cautious in commentary that could continue to strengthen the AUD, though we do expect further clarity around AUD and policy outlook going forward.