TOKYO (Sept 8): Benchmark Tokyo rubber futures fell on Friday, moving away from a three-month high hit earlier this week, as investors unwound long positions after a plunge in Shanghai futures and a jump in the yen, but managed to post a weekly gain of 3.5%.
The Tokyo Commodity Exchange (TOCOM) rubber contract for February delivery finished 5.0 yen, or 2.2%, lower at 226.0 yen (US$2.1) per kg. It had hit its highest since May 24 at 234.7 yen on Wednesday.
The most-active rubber contract on the Shanghai futures exchange for January delivery tumbled 785 yuan to finish at 16,760 yuan per tonne, pulling back further from a 5½-month high marked earlier this week.
“Investors locked in profits in both Tokyo and Shanghai after a rally early this week and ahead of the weekend,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
The broader markets braced for North Korea celebrating its founding day on Saturday and powerful Hurricane Irma headed for Florida after wreaking havoc in the Caribbean, with another major hurricane, Jose, now a Category 3, due in the northeastern Caribbean on Saturday.
On the further downside, the dollar fell more than 1% against the safe-haven yen to a roughly 10-month low of 108.07 yen. Analysts said the yen rallied as US and German government bond yields declined on the back of the ECB decision to keep rates at record lows.
A stronger yen makes yen-denominated assets less affordable when purchased in other currencies.
“Even if nothing happened in North Korea during the weekend, the rubber market may come under pressure next week due to growing concerns over hurricanes’ impact on the US economy, which may send shares down,” Kikukawa said.
The front-month rubber contract on Singapore’s SICOM exchange for October delivery last traded at 167.4 US cents per kg, down 3.2 cents.
(US$1 = 107.7100 yen)
