Morning Call by Greg Secker

FTSE closed down 22 points yesterday at 4,426. We are watching with a great deal of interest to see if the index finds support at 4,420 and rallies for the rest of the week. Last night business leaders painted a bleak picture of the economy, with a survey from the Chambers of Commerce suggesting a "frightening deterioration" towards the end of 2008 because the results of a survey they had undertaken has been “awful”. We await figures on the growth of the economy in the last Quarter on 23 January do determine if we have had six months of negative growth. The Dow opened yesterday with another round of early weakness and proceeded to trade slowly lower the rest of the day. The index closed the day with a loss of 125 points and is now approaching support at 8,370. Look to see if the index tests 8,370 today as the market may need to "feel" out this level before another break or bounce is seen. In the short term, the Dow has formed a steep upper trend line across the highs of the latest decline. Watch 8,550 for early signs of strength from current lows. The NASDAQ and S&P each dropped throughout the day, extending their bearish decline to four days. Watch for possible support tomorrow. So far this year, the Dow is down 3.5%. Stocks are still up sharply from late November but investors are quick to look for even subtle shifts in the market after the terrible run for stocks throughout last year. Today on the currencies the US and Canadian Trade Balance is due out at 13.30 so watch for possible movement on both currency pairs. The forecast for US Trade Balance is – $51.4Bn and Canadian Trade Balance is $3.2Bn. If the actual is greater than the forecast then this is good for the currency. The Chairman of the US Federal Reserve is here in London today and is due to give a speech at 12.00 noon titled "Crisis and the Policy Response" at the School of Economics and Political Science. As head of the central bank which controls short term interest rates, he has more influence over the value of the USD than any other person so we scrutinize his public engagements as they can be used to drop subtle clues regarding future monetary policy.