Nickel settled up 0.97% at 686.10 tracking firmness from LME Nickel which closed 1 percent higher at $10,565 a tonne as the global market balance in nickel is expected to move from surplus into a deficit of 49,000 tonnes next year, but prices are expected to receive only a modest boost. Yesterday prices recovered as expectations of a weaker dollar fuelled a short-covering rally, but gains are likely to be limited by technical levels and worries about slowing demand growth in top consumer China. The U.S. Federal Reserve starts a two-day meeting on Tuesday. It is widely expected to leave interest rates on hold, a factor behind the dollar's weakness this week, and possibly adopt a more dovish stance. A lower U.S. currency makes dollar-denominated commodities cheaper for non-U.S. buyers. Overnight dollar gained as metal traders await the completion of the FOMC's two-day October meeting on Wednesday afternoon for further indications on the timing of an interest rate hike by the U.S. central bank. Although the FOMC has hinted that it will likely hold short-term interest rates at its current near-zero level at the meeting, Fed chair Janet Yellen has still not ruled out a rate hike. The FOMC has left its benchmark Federal Funds Rate at its current level between zero and 0.25% for 55 consecutive meetings. At the FOMC's September monetary policy meeting, Yellen noted that the Fed will begin monetary policy normalization when it had seen "further improvement in the labor market," and was "reasonably confident" that inflation was moving toward its targeted goal of 2%. market is getting support at 678 and below same could see a test of 670 level, And resistance is now likely to be seen at 691.2, a move above could see prices testing 696.4.

Trading Ideas:

Nickel trading range for the day is 670-696.4.

Nickel prices gained as investors expected demand to be boosted by recently announced stimulus measures in China and the possibility of expanded monetary easing in Europe.

The global market balance in nickel is expected to move from surplus into a deficit of 49,000 tonnes next year.

Against a background of over 850,000 tonnes in global stocks, of which 400,000 are surplus to normal needs.