TOKYO (April 25): Benchmark Tokyo rubber futures took cues from a lower yen and stronger oil prices at the weekend to edge up on Monday, but the gains were capped by profit-taking after oil markets and Shanghai rubber pulled back, dealers said.
The new Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery <0#2JRU:> finished at 201.0 yen (US$1.81), up 2.9 yen, or 1.5%, from its opening price of 198.1 yen per kg.
“Basically, the TOCOM market lost a sense of direction today,” a Tokyo-based dealer said, adding most trade took place by switching from the September delivery to the new October contract.
“The market started with a positive tone after oil climbed and yen fell last Friday, while Shanghai rubber futures rebounded in overnight trade, but it lost ground later in the face of the yen’s recovery and falling oil.”
The yen fell to as low as 111.90 in early trade, its lowest level in more than three weeks, but Japanese exporters quickly seized the opportunity to buy the currency, pushing it back to 111.17, up 0.6% from US levels late on Friday.
A stronger yen makes yen-denominated assets less affordable when purchased in other currencies.
Oil prices dipped on Monday as traders took profits after three weeks of gains and as a jump in the dollar late last week was priced into fuel markets.
The most-active rubber contract on the Shanghai futures exchange for September delivery ended 15 yuan higher at 13,055 yuan per tonne, sliding from a high of 13,450 yuan.
On the downside, Japan’s Nikkei stock index dropped 0.8% as the yen came off lows.
Investors also locked in gains after the index on Friday soared to an 11½-week high following a report that the Bank of Japan (BOJ) would mull another easing step at its two-day policy review that begins on Wednesday.
Japan’s central bank is likely to cut its price forecasts on Thursday and debate whether a strong yen, weak global demand and soft consumption have hurt inflation expectations enough to warrant another blow of stimulus.
The market will likely stay in a range between 180 yen and around 200 yen ahead of the BOJ meeting, the trader said.
The front-month rubber contract on Singapore’s SICOM exchange for May delivery last traded at 155.5 US cents per kg, down 0.4 cent.
(US$1 = 111.2700 yen)
