Forex Market Commentaries - US Airlines At Lowest Level Since 9/11

USA Flights Fall To Post 9-11 Confidence Depressed Volume

Feb 15 • Market Commentaries • 4100 Views • 1 Comment on USA Flights Fall To Post 9-11 Confidence Depressed Volume

There are some unusual economic indicators that are always worth keeping a keen eye on, the Baltic Dry Index is an official gauge which is simply overlooked and misunderstood. However, it’s often worth considering ‘left field’ indicators as to the direction of the world’s largest economy. The latest measure of USA air traffic could prove to be just that..

U.S. airlines in 2011 operated the fewest number of flights since the hijack attacks on New York and Washington depressed air travel and accelerated the industry’s worst-ever financial downturn, government figures on Tuesday have revealed.

The Transportation Department said major airlines, their chief low-cost competitors and the biggest regional carriers, recorded 6.08 million departures last year. Takeoffs have not been that low since 2002, when they totalled 5.27 million.

The overall number of flights by U.S. airlines have steadily declined since 2008 when the recession dampened travel demand. Most recently, stubbornly high fuel prices have prompted airlines to further cut capacity to reduce costs and maintain higher fares.

When China Talks The USA Should Listen
Barack Obama asked Chinese leader-in-waiting Xi Jinping on Tuesday if Beijing could “play fair” in international trade and vowed to keep pressure on China to ‘clean up’ its human rights record. Xi’s meeting with Obama is part of a visit that could help the Chinese vice president improve USA relations with Washington for the next decade. U.S. However, leverage over Beijing is limited or non existent, because China is America’s largest foreign creditor.

Obama said, as he sat side by side with Xi in the Oval Office;

With expanding power and prosperity also comes increased responsibilities. We want to work with China to make sure that everybody is working by the same rules of the road when it comes to the world economic system, and that includes ensuring that there is a balanced trade flow.

Washington has urged Beijing to help reduce the U.S. trade deficit with China, which soared to a record $295.5 billion in 2011, heightening concerns in Congress about Chinese currency and trade practices that put U.S. firms at a disadvantage.

Chinese officials have organised Xi’s U.S. trip as a “rites of passage” in a once-in-a-decade leadership change. He is expected to become head of the ruling Communist Party later this year and then president. U.S. officials hope talks will help them gauge the policy Xi will pursue, but his views remain largely opaque to policymakers in Washington.

Greece Default Being Whispered Again
German Finance Minister Wolfgang Schauble said on Monday that the euro zone was “better prepared than two years ago” to deal with a Greek default, hinting that Athens’ days in the 17-nation bloc may well be numbered.

Euro zone finance ministers dropped plans on Tuesday for a meeting on Greece’s new international bailout, saying political party chiefs in Athens failed to provide the required commitment to reform. But as all sides push to seal the deal, there’s a growing belief that even the latest bailout, Greece’s second since 2010, might only delay the inevitable – bankruptcy/default and exit from the single currency. With the European Union’s patience with Greece close to breaking point, Eurogroup Chairman Jean-Claude Juncker said the ministers would hold only a telephone conference call before a regular meeting already scheduled for February 20.

Juncker said he was awaiting written undertakings from Greek party leaders on pushing through with the austerity package of pay, pension and job cuts, which parliament passed early on Monday as rioters torched dozens of buildings in central Athens. Juncker said this required more talks with the “troika” of Greece’s EU and IMF lenders.

I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the program. It has appeared that further technical work between Greece and the troika is needed in a number of areas, including the closure of the fiscal gap of 325 million euros in 2012 and the debt sustainability analysis.

 

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Market Overview
Most U.S. stocks fell as optimism that Greece will commit to budget cuts didn’t quite erase a decline in the Standard & Poor’s 500 Index. The euro arrested its losses whilst Treasuries and the dollar trimmed gains.

The S&P 500 slipped 0.1 percent to 1,350.5 at 4 p.m. in New York after falling as much as 0.8 percent in earlier trade. Ten-year Treasury yields fell four basis points to 1.94 percent, paring a six-point decline. Most commodities retreated, while natural gas surged 4.2 percent on forecasts for colder weather in the western U.S.

The S&P 500 is up 7.4 percent so far this year and has rebounded 23 percent from last year’s low amid better-than- forecast earnings and improving economic data. Earnings have topped analysts’ estimates at about 70 percent of the 342 companies in the S&P 500 that reported results since Jan. 9, according to data compiled by Bloomberg.

Commodity Basics
Oil fell in New York, futures declined as the Commerce Department reported that retail sales increased 0.4 percent in January, less than the 0.8 percent gain that was the median forecast of economists surveyed by Bloomberg News. Inventories rose 1.6 million barrels to 340.8 million last week, according to a Bloomberg survey. Demand is at a 12-year low. Oil for March delivery dropped 17 cents to settle at $100.74 a barrel on the New York Mercantile Exchange. It reached $101.84 earlier, the highest price since Jan. 19. Crude has gained 1.9 percent this year.

Prices were little changed after the American Petroleum Institute reported oil inventories rose 2.9 million barrels to 337.8 million last week. The March contract slid 4 cents to $100.87 a barrel at 4:37 p.m. in electronic trading. Brent oil for March settlement rose 23 cents to $118.16 a barrel on the ICE Futures Europe exchange. The March contract expires today. Brent for April fell 4 cent to $117.35.

Yesterday’s system crash that ended electronic trading was unexplained by CME Group Inc., parent of the Nymex. CME declined to disclose what caused the failure of the Globex crude and products markets, which ended electronic trading of futures and options about a half-hour before settlement.

Forex Spot-Lite
The Dollar Index, a gauge of the currency against six major peers, climbed 0.6 percent to 79.444. The yen fell 1.1 percent to a three-month low versus the dollar after the Bank of Japan said it would increase the size of its asset-purchase fund, damping demand for the Asian nation’s currency. The euro was down 0.5 percent to $1.3120 after slumping 0.8 percent earlier.

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