Japanese rubber futures surged on Wednesday to the highest levels in two months and posted their best day since early-June, as subdued Asian currencies offset concerns over disappointing domestic economic data.
Osaka Exchange’s rubber contract for January delivery finished up 2.7 yen, or 1.4%, at 203.4 yen ($1.40) per kg, up for a seventh straight session. The rubber contract on the Shanghai futures exchange for January delivery rose 220 yuan to finish at 13,225 yuan ($1,815.05) per metric ton.
Japan’s benchmark Nikkei average closed 0.48% higher. “Market is going up due to yuan weakening and China goods are actually cheaper as compared with USD ones,” said a Singapore-based trader.
“However, this may be only temporary as the demand is still weak in China and overseas. Prices will likely be met with resistance as traders have no confidence in the market until further fiscal or monetary policies from China,” the trader added.
The yen remained near a nine-month high of 146.56 touched last week, leaving traders on tenterhooks as they awaited any signs of intervention. A weaker yen makes assets dominated by the currency more affordable for overseas buyers. Japan’s threshold for currency market intervention on the yen is likely to be around 150 per dollar, both investment bank JPMorgan’s analysts and ex-BOJ official Atsushi Takeuchi said.
China’s major state-owned banks have been active in both onshore and offshore foreign exchange markets in recent weeks to arrest rapid yuan declines. Asian markets were marking time as investors awaited results from tech darling Nvidia to see if the sector’s lofty valuations can withstand a jump in bond yields, while still gloomy factory readings from Japan left sentiment fragile.
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