Aluminium settled down -0.37% at 107.50 pressured by the weaker Chinese manufacturing data, mixed US earnings and the next week's FOMC meeting all weighed on investor sentiment. Aluminum opened flat before moving lower as HSBC's flash China manufacturing PMI fell to 49.6 in January. A string of US economic data released during the European trading session came in disappointing. Markit's preliminary US manufacturing PMI slid to 53.7 in January. Existing home sales and the Conference Board's leading indicator gained less than expected. Initial jobless claims were flat with expectations. These are signs that US economic growth is not as strong as expected. This rekindled expectations that the Fed may slow down its pace of QE3 tapering, sending the US dollar index down to 80.4. A softer greenback pushed LME aluminum up to USD 1,786.8/mt. However, LME aluminum retreated to USD 1,762.5/mt at the tail of the session due to worries over slackening demand from the US and China, and closed 1% lower at USD 1,763.3/mt. In contrast, a series of economic data from European countries were encouraging. The euro zone's manufacturing PMI during January climbed to the peak of 53.9 since May, 2011, with the reading in service sectors up to a four-month high of 51.9 and the composite PMI index up to 53.2 from 52.1. Germany's composite PMI went up to the highest of 55.9 since June, 2011, while Markit expected the country's Q1 GDP growth to accelerate to 0.7% in the year. Technically market is under fresh selling getting support at 107 and below same could see a test of 106.4 level, And resistance is now likely to be seen at 108.2, a move above could see prices testing 108.8.

Trading Ideas:

Aluminium trading range for the day is 106.4-108.8.

Aluminium seen under pressure due to worries over slackening demand from the US and China

The euro zone's composite output index rose to a 31-month high of 53.2 in January, up from a final reading of 52.1 in December

Aluminium daily stocks at Shanghai exchange came down by 226 tonnes