On Friday the FTSE closed up 0.2 points, at 4,057 having pierced through the 4,000 mark for the first time since early December. The UK benchmark is down over 8 percent so far this month, its worst annual drop since its launch in 1984. After a very volatile session of trading the major US equity indices pared opening losses to close mixed as investors struggled to weigh mixed results from the likes of General Electric and Google. The Dow closed 0.6% lower at 8,078. The Dow opened the day with early weakness as the index dropped back to the 7,900 support level before rallying back to 8,150. The index eventually pulled back from intraday resistance and closed the day with a loss of 45 points. The Dow continues to wind up within the large 7-day trading range. As we mentioned last week the Dow is likely to continue to build out within this range until a clear and decisive direction is determined. Watch the upper line of the range at 8,200 for signs of strength and watch 7,900 for another big test at near-term support. Today the major news release is the US Home Sales at 15.00 GMT. The pound took a hammering on the back of the news on Friday. Once again the sterling suffered the biggest losses of the major currencies last week. GBP USD plummeted from over 1.49 to below 1.37. EUR-GBP rose accordingly from 0.89 to 0.945. The Government’s announcement of a new rescue package for British banks put the pound under pressure. The EUR pushed down to a low of 1.2765 before recovering slightly to 1.2972. However, it continues to threaten the major support at around 1.26. There is no major news due today. The Swiss franc weakened further against the USD as the reserve currency continues to reap the benefits from safe haven flows, and is likely to hold its bearish trend against the greenback as risk sentiment continues to drive price action in the Forex market.
