TOCOM rebounds on Japan‘s stimulus plans, softer yen

Benchmark Tokyo rubber futures bounced back in thin trade on Wednesday, after hitting a two-week low the previous day, as some investors unwound short positions after Japan announced a large stimulus package and the yen fell. 

Prime Minister Shinzo Abe unveiled a surprisingly large $265 billion fiscal stimulus package on Wednesday to reflate the world's third-largest economy, adding pressure on the central bank to match the measures with monetary stimulus later this week. 

"Some traders stepped up unwinding their positions in response to Abe's stimulus plans and the softer yen while a healthy U.S. economy and firmer Shanghai futures also lent support," a Tokyo-based dealer said. 

The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery finished 2.8 yen, or 1.8 percent, higher at 156.5 yen ($1.48) per kg. 

The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, snapped a three-day losing streak as the yen fell more than 1 percent against the dollar in Asian trading amid expectations of further monetary easing by the Bank of Japan. 

A weaker yen makes yen-denominated assets more affordable when purchased in other currencies. 

The most-active rubber contract on the Shanghai futures exchange for September delivery gained 105 yuan to finish at 11,180 yuan ($1,676.49) per tonne. 

"Still, the TOCOM has been stuck in a narrow trading range. I expect the benchmark to remain within a range between around 154 and 165 yen," the dealer said.