Zinc settled down -0.51% at 127.50 after poor manufacturing PMI for China on Thursday. Economic data from the Euro zone indicated slow recovery in the area, causing the euro to slip for a second day, which negatively affected LME. Later, the US initial jobless claims last week exceeded estimate, and the nation's January CPI met forecast. The Philly Fed manufacturing index came in lower than expected at -6.3, but February's Markit manufacturing PMI for the US beat forecast, easing concerns over the US growth. The HSBC flash China manufacturing PMI hit a seven month low of 48.3 in February, slumping from January's 49.5, with the sub-indices for output and new orders falling to the lowest in seven months. In addition, the People's Bank of China (PBOC) conducted a RMB 60 billion 14-day repurchase Thursday, RMB 12 billion higher than Tuesday's operation, allowing the central bank to drain a net RMB 108 billion from markets. The poor data and tightened liquidity will add to a drag on base metals. Worse-than-expected data from Europe helped with a rally in the US dollar. US Initial jobless claims for the week ending February 15 were 336,000, slightly higher than the estimated 335,000, but down 3,000 from a week earlier, reflecting an uptick in the labor market. US CPI grew by 0.1% MoM and 1.6% YoY in January, meeting estimates. Technically market is under long liquidation as market has witnessed drop in open interest by -12.15% to settled at 2436 while prices down -0.65 rupee, now Zinc is getting support at 126.9 and below same could see a test of 126.2 level, And resistance is now likely to be seen at 128.1, a move above could see prices testing 128.6.

Trading Ideas:

Zinc trading range for the day is 126.2-128.6.

Zinc dropped after data showed a contraction in China's manufacturing sector, which raised doubts about the outlook for demand

Data from a preliminary private survey showed activity in China's factories shrank in February as employment fell at the fastest pace in five years.

Minutes of Fed's meeting indicated that central bank will maintain the current pace of reductions to its stimulus program.