TOKYO, Oct 28 (Reuters) – Benchmark Tokyo rubber futures rose on Wednesday, recovering from a six-year low hit the previous day, driven by bargain hunting and technical rebound, but gains were capped as investors awaited a policy statement from the U.S.Federal Reserve.
The Tokyo Commodity Exchange rubber contract for April delivery JRUc6 0#2JRU: finished 1.1 yen, or 0.7 percent, higher at 159.6 yen ($1.33) per kg.It tumbled more than 4 percent the previous day.
“What we saw was an autonomous rebound after a sharp dive on Tuesday,” a Tokyo-based dealer who declined to be named said. “Buys outweighed sells despite higher yen,” he added.
The yen stood at 120.40 to the dollar JPY= in late Asian trade on Wednesday, against this week’s low of 121.5. A stronger yen reduces the value of yen-based rubber in a dollar base and normally encourages investors to sell rubber futures at TOCOM.
“If the Fed maintains the monetary policy unchanged, the dollar may fall, sending Chinese yuan lower, which is likely to help buoy Shanghai futures as well as the TOCOM,” the dealer said. The Federal Reserve is expected to keep interest rates unchanged on Wednesday and may struggle to convince sceptical investors it can tighten monetary policy before the end of the year in the face of U.S.and global economic headwinds.
The FOMC will release its policy statement later on Wednesday. FED/DIARY The most-active rubber contract on the Shanghai futures exchange for January delivery SNRcv1 fell 5 yuan to finish at 10,830 yuan ($1,703.15) per tonne. The front-month rubber contract onSingapore’s SICOM exchange for November delivery STFc1 last traded at 124.5 U.S. cents per kg, up 1.8 cent. ($1 = 6.3588 Chinese yuan renminbi) ($1 = 120.3400 yen)
(Reporting by Yuka Obayashi; Editing by Anupama Dwivedi)