Zinc settled down -0.31% at 127.35 as pressure continious to see on prices after the weak China services data which showed that services growth fell to the lowest level since August 2011 last month signaled a deepening slowdown in the world’s second biggest economy clouding the demand outlook for industrial metals trimming gains in zinc futures. The gauge measuring China services fell to 50.9 in December from 52.5 in the previous month with a reading above 50 signaling expansion HSBC said. While the US Senate confirmed Janet Yellen as the new Chief of the Fed, but the news exerted limited influence on the market as the result matched expectation. What really boosted the market was a 13% drop in the US trade deficit during November to USD 34.3 billion, its lowest since October 2009. The US exports, primarily driven by industrial supply, means of production, and automobile exports, hit an all-time high in November. The shrinking imports of crude oil were also behind the lower trade deficit which heralded further improvement in the economy. In the euro zone, the preliminary CPI rise for December retreated to 0.8% from 0.9%, and core CPI excluding energy, food, alcohol and tobacco prices was only 0.7%. PPI also fell by 0.1% on the month during November and staged a 1.2% YoY decline. The data which might indicate continued deflation risk in the currency union did not trigger market concerns. Technically market is under long liquidation as market has witnessed drop in open interest by -1.52% to settled at 3113 while prices down -0.4 rupee, now Zinc is getting support at 126.8 and below same could see a test of 126.3 level, And resistance is now likely to be seen at 127.9, a move above could see prices testing 128.5.

Trading Ideas:

Zinc trading range for the day is 126.3-128.5.

Zinc halted its rally last week amid negative flow of data from China.

However, the industrial metal may catch momentum on falling LME inventories.

LME supplies added 3.67% but stood about 24% lower than in the beginning of 2013.