Rubber Declines on Speculation Dollar Rally to Weaken Appeal

Rubber Declines on Speculation Dollar Rally to Weaken Appeal
Dec. 7 (Bloomberg) -- Rubber dropped for the first time in six days on speculation a U.S. economic recovery may boost the dollar and cut the appeal of commodities as an alternative asset.
Futures in Tokyo declined as much as 1.8 percent, reversing last week’s 8.8 percent gain, the best performance since October. An unexpected fall in U.S. unemployment boosted the dollar and sent gold slumping on speculation that an improving U.S. economy will result in higher interest rates. Japan’s currency posted its biggest weekly loss in a decade last week, retreating from a 14-year high against the dollar.
“Improvement in U.S. employment makes an exit from the zero-interest rate policy more likely,” Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co. in Tokyo, said today by telephone. “That would raise the appeal of the dollar and reduce investor demand for commodities.”
Rubber for May delivery, the most-active contract, fell as much as 4.6 yen to 257.9 yen per kilogram ($2,867 a metric ton) before settling at 261.3 yen on the Tokyo Commodity Exchange.
The dollar advanced after data on Dec. 4 showed employers in the U.S. cut the fewest jobs in November since the recession began. Payrolls dropped by 11,000, and the jobless rate declined to 10 percent, according to the U.S. Labor Department.
The yen had its biggest weekly decline in a decade, sinking 4.5 percent against the dollar for the week ended Dec. 4. The Japanese currency, which reached a 14-year high of 84.83 per dollar on Nov. 27, traded at 89.95 at 3:42 p.m. in Tokyo.
Car Sales
Losses in rubber futures were limited by speculation that rising car sales in China, the largest consumer, may help boost raw material demand, Saito said.
Sales of domestically made vehicles in China in the first 11 months of the year rose to more than 12 million units, the official Xinhua news agency said, citing figures from the China Association of Automobile Manufacturers. Sales for the year are expected to exceed 13 million, Xinhua said, making China the world’s biggest auto market.
“Rubber is supported by expectation that car tire sales in China will keep growing,” Saito said.
China’s top leaders pledged to maintain a “moderately” loose monetary policy stance and “proactive” fiscal policies next year to bolster growth in the world’s third-largest economy.
Rubber for March delivery on the Shanghai Futures Exchange lost 0.8 percent to 22,265 yuan ($3,261) per ton at 2:51 p.m. local time.