Despite continuing to fall week on week, prompt raw sugar futures have found decent support at 17 USc/lb. In the following sessions, prompt May-17 managed to test 18 cents before a slight correction to current levels sees the market largely unchanged near 17.70 USc/lb. In Brazil, the Government is expected to raise CIDE tax on gasoline which will provide sustenance to domestic sugar prices and ethanol. In India, the arm wrestle between producers and government persists. Domestic prices have drifted off, with producers signifying no urgent need to lower the import duty. Locally, cyclone Debbie is threatening crops in the Proserpine and Mackay regions. Full extent of damage won’t be known for some time; but our thoughts go out to those in the region.
A relatively quiet week for currencies as the market continued to digest less hawkish Fed and RBA commentary. The AUD continued to slide, testing support levels near 76 cents on Friday night despite recent outperformance. Early USD strength was unwound as the markets response to President Trumps failed attempt to gain support for his healthcare bill was rejected. Given this failure, increased political risk will come to forefront moving forward as risk of the flamboyant and fiery nature of Trump potentially on show. Looking ahead, this week we have no local data of note due. Elsewhere we see US GDP and China Manufacturing PMI later in the week. In the short term we expect the AUD to remain in the 0.7600–0.7675 range, with technical support at 0.7580 and 0.7700 if broken.