Aluminium yesterday traded with the positive node and settled 0.97% up at 103.35 as China and Europe's weak flash PMI reading for August raised expectations for easing monetary policies in the two regions. Combined with hint of possible QE3 by the Fed, the US dollar extended losses for a fourth straight trading day to 81.221, the lowest for the month. In response, LME aluminum jumped to $1,900/mt and broke through resistance at the 60-day moving average during European session. Trading volumes doubled to 16,667 lots, the highest since July 3. However, as investors took profits at high prices, LME aluminum trimmed some early gains at the tail of trading. Finally, LME aluminum ended the day up $25/mt or 1.34% at $1,895/mt. Investors are generally standing on the sidelines as the weekend approaches and due to the British Summer Bank Holiday next Monday, leaving aluminum prices in correction. In addition, the initial jobless claim from the US on August 23 was 372k, higher than previous estimation of 365k. The economic conditions in the US and Europe have not improved significantly, which prevented base metal prices from rebounding sustainably, but fueled expectation over loose monetary policy. For today's session market is looking to take support at 102.5, a break below could see a test of 101.6 and where as resistance is now likely to be seen at 104, a move above could see prices testing 104.7.

Trading Ideas:

Aluminium trading range for the day is 101.62-104.72.

Aluminium gained as China and Europe's weak flash PMI reading raised expectations for easing monetary policies

Investors are generally standing on the sidelines as the weekend approaches leaving prices in correction.

In China, data showed factory activity in August shrank at the fastest pace in nine months as new export orders slumped