Aluminium may trade 106.1-108.9 range, gains at 107.75

Aluminium settled up 0.28% at 107.75 rebounded as LME Aluminium gained to settled at USD 1,636/mt later as the US dollar index fell after the US Fed announced no rate hike in September. Adopting a relatively dovish stance, Fed chair Janet Yellen said the U.S. central bank will begin monetary policy normalization when it has seen "further improvement in the labor market," and it is "reasonably confident" that inflation is moving toward its targeted goal of 2%. Yellen also noted that large drags from falling energy and import prices should dissipate in the near future allowing long-term inflation to move back toward its long-term target.

Still, the Fed downgraded its median inflation forecasts at the meeting to 0.3% for the end of 2015, while lowering inflation expectations for the end of next year to 1.7%. The Fed now expects that inflation will not reach its 2.0% target until 2018. The Fed also lowered its median forecasts for the Fed Funds Rate for the end of the year to 0.4%, from previous estimates of 0.6%. A bevy of short-term rates such as debt for credit card holders are pegged to the benchmark, which banks use to lend to other institutions on overnight loans.

The Fed also lowered its rate forecasts for 2016 and 2017 to 1.7 and 1.9% respectively, representing a decline of 0.1% for each year. One member of the FOMC, Richmond Fed president Jeffrey Lacker, dissented, recommending a 0.25% interest rate hike at the meeting. Now technically market is getting support at 107 and below same could see a test of 106.1 level, and resistance is now likely to be seen at 108.4, a move above could see prices testing 108.9.