Aluminium settled up 0.32% at 109.30 as some processors have closed for the Chinese New Year holiday, creating a supply glut in south China. LME aluminum opened at USD 1,806/mt on Tuesday before moving lower to USD 1,781/mt on a stronger greenback. It is said that the Fed may dial down QE3 again within six weeks, driving the US dollar index up to 81.3. However, LME aluminum rebounded to end at USD 1,801/mt after the US dollar index fell back. Aluminum was the worst performer among the entire metals pack in the yesterday's trading session at the LME platform to close below $1800/MT mark. Aluminum inventories continues to remain stubbornly higher above 54, 00,000 MT marks. Even though the inventories hav e been rising aluminum prices broadly rallied due to lack of av ailability of the metal in the US due to below normal temperatures. The People's Bank of China conducted seven-day reverse repos worth RMB 75 billion and RMB 180 billion of 21-day reserve repos following its cash injection via SLF, injecting a net RMB 255 billion in a single day, a high last seen during 2013's Chinese New Year holiday. In addition, the PBOC will also auction 40 billion of three-month treasury deposits on Thursday, to ease liquidity tightness around the Chinese New Year holiday. Chinese stock market closed higher as a result. Technically market is under short covering as market has witnessed drop in open interest by -6.44% to settled at 2105 while prices up 0.35 rupee, now Aluminium is getting support at 108.5 and below same could see a test of 107.5 level, And resistance is now likely to be seen at 110.1, a move above could see prices testing 110.7.

Trading Ideas:

Aluminium trading range for the day is 107.5-110.7.

Aluminium settled up as some processors have closed for the Chinese New Year holiday, creating a supply glut in south China.

In the US, Fed may reportedly cut QE by another USD 10 billion after its January policy meeting scheduled on January 28-29

Aluminium daily stocks at Shanghai exchange came down by 426 tonnes