Nickel yesterday settled down -0.15% at 850.90 as as China's manufacturing intensity slows, the Nickel market has been hit, with China's stainless steel factories also turning away from high purity metal to cut costs. Instead they are feeding a cheaper alternative, nickel pig iron typically formed from laterite ore which has low nickel content into their furnaces. According to last Friday's US non-farm employment report, non-farm payrolls rose by 162,000 in July, lower than the 185,000 forecast and June's 195,000. Non-farm payrolls in June were revised down from a 195,000 increase to a 188,000 growth, and non-farm payrolls in May were also revised down from a 195,000 rise to a 176,000 increase. However, unemployment rate fell from 7.6% to 7.4%, the lowest since December 2008. Disappointing non-farm employment report alleviated worries that the Fed will begin to taper off QE3 in September. As a result, the US dollar index retreated from 82, lending support to base metals. On the other hand, factory orders in June missed forecasts, triggering concerns that a weaker US economy will eat into metal demand. PPI in the euro zone June rose by 0.3% YoY in June, in line with expectations and flat with May. A paper by the Richmond Fed said the ECB should launch quantitative easing across the board to lift the euro zone fully out of its slump. This ignited anticipation that the ECB may roll out monetary stimulus soon. China's non-manufacturing PMI was 54.1 in July, capping forecasts and rising for the first time in four months, which will lift base metals prices only marginally. Technically market is getting support at 849 and below same could see a test of 847.1 level, And resistance is now likely to be seen at 852.9, a move above could see prices testing 854.9.

Trading Ideas:

Nickel trading range for the day is 847.1-854.9.

Nickel settled flat after number of US non-farm employment in July released last Friday increased by 162,000.

Nickel miners have been clinging to plans to maintain production, despite a growing supply glut and prices around four-year lows.

PBOC said during its 2Q monetary policy report that lending to polluting and energy-intensive enterprises will be constrained.