Tokyo rubber futures eased as investors took profits on Thursday when they neared a major resistance level at 220 yen, but sentiment remained bullish due to strong oil prices. The key Tokyo Commodity Exchange rubber contract for March delivery fell 3.5 yen or around 2 percent to 214.4 yen per kg, after earlier rising to 219.1 yen.
The benchmark contract retreated on profit taking from a one-year high of 219.6 yen on Wednesday, proving that 220 yen remained the key technical resistance level. The last time a benchmark rose above 220 yen was in October last year. Rubber futures were supported, however, by the general inflow of speculative money into commodities and commodity-linked currencies as investor risk appetite was slowly recovering.
"Rubber, along with other commodities and commodity-linked currencies such as the Australian dollar, is rising as it is becoming clear that risk-taking is resuming and speculative money is flowing into the markets across the board," said Masato Miyanaga, senior adviser at H.S. Futures in Tokyo. "While players may face near-term resistance at 220 yen, the market is looking upwards technically after breaking above a 191-210 yen range that had been in place since August," he said.
A new range was forming at 210-230 yen, he said. Traders said firmness in the physical market due to tightness in supply and strong oil prices also helped support sentiment for futures. US crude oil rose towards $76 per barrel on Thursday, extending the previous day's gains when it settled at a record high for the year on renewed optimism about the outlook for the economy. The dollar was around 89.65 yen on Thursday compared with late US trading levels of 89.36/40.
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