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TOCOM rubber plunges to near 4-month low as firmer yen weighs

TOKYO, June 9 (Reuters) – Benchmark Tokyo rubber futures plunged to a nearly 4-month low on Thursday, extending losses into a third session, as a stronger yen weighed on market sentiment. The Tokyo Commodity Exchange (TOCOM) rubber contract for November delivery JRUc6 0#2JRU: finished 5.5 yen, or 3.5 percent, lower at 150.8 yen ($1.42) per kg. It earlier touched a low of 150.2 yen, the lowest since Feb.19.

The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, came under strong selling pressure in early afternoon trade as the yen moved higher. The U.S. dollar slipped 0.4 percent to 106.58 yen JPY= , nearing a one-month low of 106.35 hit on Monday in the wake of the weaker-than-expected U.S.jobs report.

Data showed that Japan’s core machinery orders tumbled 11 percent in April from the previous month, more than the median estimate of a 3.8 percent drop, in a worrying sign for business investment.

A stronger yen makes yen-denominated assets less affordable when purchased in other currencies. “But I suspect today’s fall was more to do with high-frequency computer trade.

The way the market tumbled was very strange,” a Tokyo-based dealer said. “Someone was trying to push down the market to take advantage of light trade while Chinese traders were away,” he said.

China’s markets are closed on Thursday and Friday for the Dragon Boat festival holiday. Meanwhile, oil prices edged up to fresh 2016 highs on Thursday, buoyed by a fall in U.S.crude inventories, a weaker dollar and strong demand, although some analysts warned that the recent rally was starting to look overblown.

O/R The front-month rubber contract on Singapore’s SICOM exchange for July delivery STFc1 last traded at 123 U.S. cents per kg, down 4.1 cent.

($1 = 106.4400 yen)

(Reporting by Yuka Obayashi; Editing by Sunil Nair)

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