Zinc settled down -0.67% at 126.50 as pressure seen from the US major economic data released overnight was upbeat, which pushed up the US dollar index to rebound and caused LME zinc prices to fall. LME zinc prices overnight opened at USD 2,039/mt, then hovered between USD 2,040-2,050/mt during Asian trading hours. The US Federal Reserve's (Fed) policy meeting minutes hinted QE3 wind-down will depend on economy and effects of its assets purchasing plan. But US ADP employment in December grew more than expected, hitting a 13-month high and lifted market optimism toward US December non-farm employment data. the US dollar index broke through 81, weighing down LME zinc prices to USD 2,025/mt, and finally closing at USD 2,029.8/mt, down USD 11.3/mt or 0.55%. The minutes from the last FOMC meeting showed that Fed's members saw QE benefits from the slipping and were still concerned about inflation rate. But most of Fed's officials were confident in job recovery. The US dollar index trended up briefly following the release, which was also viewed as a result of upbeat economic data. The December employment according to ADP report was up 238,000, outpacing the 200,000 expected and November's 215,000. This has lifted market confidence in nonfarm payroll data to be announced this Friday. Technically market is under long liquidation as market has witnessed drop in open interest by -5.88% to settled at 2930 while prices down -0.85 rupee, now Zinc is getting support at 125.9 and below same could see a test of 125.2 level, And resistance is now likely to be seen at 127.7, a move above could see prices testing 128.8.

Trading Ideas:

Zinc trading range for the day is 125.2-128.8.

Zinc dropped hurt by evidence of economic cooling in top consumer China but buttressed by signs of a growth revival in the United States.

Fed policy meeting minutes hinted QE3 wind-down will depend on economy and effects of its assets purchasing plan.

Zinc daily stocks at Shanghai exchange came down by 817 tonnes