Aluminium settled up 0.96% at 120.65 as support seen after the update that LME aluminum inventories shrank by 5,800 mt to 5,438,675 mt also improving economy in China and positive economic data from Europe and the US increased long momentum in the market. Also US housing starts and building permits in July missed forecasts, indicating rising mortgage rates may be hampering US housing market recovery. The University of Michigan Consumer Sentiment in August fell from a 6-year high hit in July. 10-year yields of US government bonds hit a new 2-year high due to renewed selloff. The Dow Jones Index fell by 0.2% on the day and 2.23% on the week, the largest weekly decline in 14 months. The US dollar index gained 0.18%, while the euro edged down 0.16% against the US dollar. US stock markets closed down across the board. European stocks all closed with gains. Asian shares were mixed. All base metals on the LME rose. Also Global aluminum producers including Rusal and Alcoa Inc. (AA) have announced output curbs as a glut in capacity weighed on prices of the lightweight metal. Rusal today said it will target cutting its production by 357,000 metric tons in 2013, up from a March estimate of 300,000 tons. Technically market is under short covering as market has witnessed drop in open interest by -0.9% to settled at 3183 while prices up 1.15 rupee, now Aluminium is getting support at 119.9 and below same could see a test of 119.2 level, And resistance is now likely to be seen at 121.1, a move above could see prices testing 121.6.

Trading Ideas:

Aluminium trading range for the day is 119.2-121.6.

Aluminium gains as US major economic data fell short of expectations, increasing positions continued to pull up the prices.

US housing starts and building permits in July missed forecasts, indicating rising mortgage rates may be hampering US housing market recovery.

Aluminium weekly stocks at Shanghai exchange came down by 15146 tonnes