Nickel on MCX settled down -1.32% at 688 on fresh selling despite support was coming from a weaker US dollar and the Indonesian government’s indication that it will not flood the market with nickel as it eases its export ban. While still sentiments remain weak as concerns continuous to prevail that as Indonesia relaxed its export ban the market would be flooded with new supplies, depressing nickel prices. But, Indonesian officials, according to Reuters, said the easing of the three-year ban on nickel ore exports would not flood the market as the amount of exports will be enough to balance the country’s smelters and to generate jobs. According to the country’s mining minister, Indonesian mines may export up to 5.2 million tons of nickel ore a year under the new rules, about 10% of what the country was exporting before the ban. Meanwhile, dollar-denominated nickel has garnered extra support from a weakening US dollar. The currency has pulled back as traders react to Donald Trump’s comments to the Wall Street Journal that the US dollar was “too strong” because China was keeping its own yuan weaker. Even before Trump’s comments impacted the currency, it was trending downward. The dollar surged in the fourth quarter, rising 5% to reach multi-year highs, and has since pulled back in early 2017. The weaker US currency is positive for dollar-denominated nickel because it attracts holders of international currencies to the market. Technically market is under fresh selling and getting support at 681.8 and below same could see a test of 675.5 level, And resistance is now likely to be seen at 698.3, a move above could see prices testing 708.5.

Trading Ideas:

Nickel trading range for the day is 675.5-708.5.

Nickel dropped with pressure from Indonesia's move to ease a ban on nickel ore exports.

Indonesia introduced new rules last week that will allow exports of nickel ore and bauxite and concentrates of other minerals under certain conditions.

Indonesia's abrupt easing of a three-year ban on nickel ore exports will not flood the global market but instead is aimed at balancing the country's smelters.