Zinc settled up 0.64% at 125.6 lifted by a weaker dollar after worse-than-expected US labour market data reinforced the view that the US Federal Reserve is likely to be cautious in scaling back its bond-buying stimulus programme. Investors were optimistic on the nonfarm payrolls since ISM PMI data and ADP employment, as well as initial jobless claims were strong, but the results fell significant short of estimates. That said, jobless data dropped sharply to 6.7% due to lower labor force participation rate. In response, the US dollar index slumped, losing 0.36%, allowing commodities to advance. Weak nonfarm payroll data, though partially caused by bitter cold, indicated unstable recovery in labor market, adding to uncertainty surrounding pace of QE tapering. US December non-farm employment data released during European and US trading hours only rose by 74,000, much lower than expectations, while unemployment rate slid to 6.7%. The US dollar index was thus pushed down, boosting LME zinc prices to rise, standing at the 5 and 20-day moving average, and closing at USD 2,041.5/mt, up USD 32.5/mt or 1.62%. In Europe, economic data from the UK were poor, with November industrial, manufacturing and construction output all lagging forecasts. The euro zone final Q3 GDP growth held steady at 0.1%, and French industrial production rose by 1.3% in November. LME zinc inventories fell by 4,450 mt to 905,575 mt. Now Zinc is getting support at 124.7 and below same could see a test of 123.7 level, And resistance is now likely to be seen at 126.4, a move above could see prices testing 127.1.

Trading Ideas:

Zinc trading range for the day is 123.7-127.1.

Zinc gained lifted by a weaker dollar after worse-than-expected US labour market data

The US nonfarm payroll rose by 74,000 in December, well below the expectations and presenting the smallest increase since January 2011

Zinc weekly stocks at Shanghai exchange came up by 1332 tonnes