Benchmark Tokyo rubber futures edged higher on Monday, helped by a weaker yen after comments by Federal Reserve Chair Janet Yellen raised the prospects of a near-term US interest rate hike. "A sharp fall in the yen helped improve the market sentiment while firmer Shanghai futures in the afternoon also lent support," said Toshitaka Tazawa, an analyst at Fujitomi Co.
The Tokyo Commodity Exchange (TOCOM) rubber contract for November delivery finished 0.9 yen, or 0.6 percent, higher at 163 yen ($1.46) per kg. The most-active rubber contract on the Shanghai futures exchange for September delivery rose 70 yuan to finish at 10,555 yuan ($1,603.66) per tonne. The front-month rubber contract on Singapore's SICOM exchange for June delivery last traded at 125 US cents per kg, down 1.9 cent. The dollar hit a one-month high against the yen on Monday after comments by Yellen enhanced the prospects of a near-term US interest rate hike.
A weaker yen makes yen-denominated assets more affordable when purchased in other currencies. "Now that TOCOM prices have rebounded by about 10 yen since hitting a May low, investors have become hesitant to step up selling," Tazawa said. "Also investors want to look at China's PMI, due later this week, to see where its economy is headed," he said. Growth in China's vast manufacturing sector likely stalled in May after slight expansions in the previous two months, a Reuters poll showed, throwing more cold water on hopes that the world's second-largest economy is reviving. The official manufacturing PMI data in China, the world's biggest rubber buyer, will be released on June 1.