3 September 2014

Weekly Market Report 3 September 2014


Current themes have continued in the sugar market. Excess supply near term with hope of a smaller Indian crop, rainfall shortage in Thailand and the effects of lack of husbandry in Brazil for 14/15 dominating. New contract lows in Oct were followed by what could only be called a short squeeze. 16.00 was a large resistance level that held firm. Near term, a test of the contract lows seems on the cards with the potential for a test of 15.00. There is good evidence of Brazilian producers washing out of sugar sales into ethanol at these levels. Oct futures have had two attempts now to break 16 and have failed. Until a convincing break is made through 16.05 or something changes fundamentally, selling rallies will dominate.


AUD/USD has continued in the same 9200–9500 range. Fundamentally USD has sold off following an overbought position, but that trade looks like its has run its course. GDP partials on the margin have been positive yet the currency has sold off. The RBA has acknowledged again the AUD is overvalued but there is enough peripheral data to suggest his time we may get some continuation. A move through 9200 targets 9000 quickly. There is a lot of data out this week from US employment and ISM to an ECB meeting on Thursday. In a macro sense the USD has been bid and an overbought position has been unwound. We are targeting a higher USD with AUD/USD being taken lower as a consequence .

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