Rubber futures in Tokyo dropped to the lowest price in almost two weeks as the strengthening Japanese currency reduced the appeal of yen-based contracts and as Japan’s machinery orders trailed estimates.
The contract for February delivery on the Tokyo Commodity Exchange fell as much as 1.6 percent 278.5 yen a kilogram ($2,799 a metric ton), the lowest level since Sept. 2. Futures traded at 280 yen at 12:55 p.m. local time, bringing this year’s drop to 7.4 percent.
The yen gained against the dollar for a second day as traders speculated whether the U.S. economy is strong enough for the Federal Reserve to decide as early as next week to start reducing stimulus. Machinery orders rose 6.5 percent in July after climbing 4.9 percent in June, the Japanese government said. That missed economist estimates for 7.7 percent growth.
“A strong yen is negative for the rubber market,” said Naohiro Niimura, a partner at research company Market Risk Advisory Co. in Tokyo. “The weaker machinery data raised concern that rubber demand will decline.”
The Fed will decide to cut its $85 billion in monthly bond purchases this month, according to 65 percent of economists surveyed by Bloomberg from Aug. 9-13. The Federal Open Market Committee holds a two-day meeting on Sept. 17-18.
Japan’s vehicle manufacturing fell 14 percent in July from the previous month, today’s government data showed.
The contract for January delivery in Shanghai fell 1.2 percent to 20,480 yuan ($3,347) a ton. Thai rubber free-on-board was unchanged at 86.15 baht ($2.72) a kilogram yesterday, according to the Rubber Research Institute of Thailand.
Source: Bloomberg
