As we signed off our last Comment ahead of a well-deserved Thanksgiving holiday, a short-covering rally had pushed aluminium back above 2700 in Wednesday's premarket. Volumes were light and the move was largely driven by systematic CTAs, buying back shorts across the board as falls across the metals complex were arrested earlier in the week. As we signed off, 3-months had topped 2708, after which interest died and the doomsayers got back behind the wheel. By the time Thursday came around prices were down at 2645, though from there it shot higher once more. The dollar fell off a cliff as US traders tucked into their turkeys and pumpkin pies, while nickel and zinc both rocketed, pulling the rest of the metals higher with them. As we wrote in our previous report, Cliff Green Consultancy had put key resistance at 2740 and Friday's continued rally finally topped out at 2739.
As ever -- in the aluminium market, at least – most of the action and volume was in the carries and the generous C-3m contango that had developed all but disappeared. Jan-Mar'07 was the period of choice, with borrowers bidding it aggressively from 2.50b on Tuesday night to 13.00b by Friday.
On Monday morning aluminium had at time of writing peaked at 2735 and fallen away to 2705 currently. CGC held technical resistance at 2740, a breach of which could see gains extended towards 2800, they wrote in a report, while local support now began at 2650.
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