Key Tokyo rubber futures fell on Thursday, coming under pressure from a jump in the yen versus the dollar after a surprise move by the Federal Reserve to buy up to $300 billion worth of long-dated US government debt. But declines were limited by a rally in oil prices to close to $50 a barrel after the Feds move aimed at boosting the worlds biggest economy by lowering market interest rates.
"The rubber market is down on the yen," said a trader at a Japanese trading company. "But its current tendency showing a positive correlation with oil prices means that the market has upside potential. Also, technically, yesterdays rally clearing the recent range is a positive sign in the midterm." The key Tokyo Commodity Exchange rubber contract for August delivery was down 1.9 yen or 1.4 percent at 139.1 yen per kg at 0407 GMT. The contract on Wednesday rose as high as 143.3 yen, the highest since February 27. The Tokyo market is closed on Friday for a national holiday and resumes trading on Monday.
US crude oil recouped the previous sessions losses and rose to $49.18 a barrel on Thursday after the Feds move revived optimism about demand from the worlds biggest oil consumer. The dollar fell nearly 3 percent against the yen on Wednesday as the Feds move caused the biggest one-day drop in US 10-year Treasury yields since the 1987 stock market crash.
On Thursday the dollar stayed near the previous days lows below 96 yen. A weaker yen helps support the rubber market as it inflates yen-based futures prices. In the physical market, prices were little changed on Thursday, with traders making few transactions because of a mixed outlook for prices.