NYMEX crude oil prices drop below $79 as Euro falls against USD on Greece concerns

The Euro declined the most in almost a month against the US dollar on concern Greece's struggles to reduce its budget deficit will damage confidence in the region. The EUR/USD forex exchange rate fell as much as 0.8%, the biggest decline since 17 Dec 2009. Oil prices fell for a fifth day, the longest losing streak in five weeks, leading declines in commodities prices. ECB President Jean-Claude Trichet's warning that no member nation can expect "special treatment" fueled concern Greece's debt won't be eligible as collateral at the central bank. Rating downgrades sparked a rout in Greece's bonds in Dec 2009 as the budget deficit headed for 12.7% of GDP, more than 4 times the European Union limit.

Feb 2010 NYMEX crude futures fell to $78.95. The S&P GSCI Index of commodities fell for a fifth day, the longest losing streak in a month. Corn declined 0.9% to $3.7775 a bushel in Chicago trading. Wheat and soybeans also declined. Copper fell 0.5 percent to $7,455.50 a metric ton on the London Metal Exchange, leading a drop in industrial metals.

- It looks like we could be headed for a slight pause in the commodities rally powered by crude oil and gold prices coming into the beginning of 2010, or at least a consolidation situation in the commodities markets before the next directional movement can be discerned. The threat of a China slowdown with the central bank starting to make noises about tightening credit and reining in the runaway property boom does not help the bullish case very much either. Hence I am now looking once again at support levels with that for crude oil prices being around the $75 level and for gold prices it is around the $1100 level, with the advice being to watch for either support holding or breaking down below these levels.

Japan Airlines (JAL) to cut 15600 jobs under turnaround plan

channelnewsasia.com :

Troubled Japan Airlines (JAL) is expected to cut 15,600 jobs, or about 30% cent of its group workforce, in 3 years under a rehabilitation plan. The layoffs, coupled with cuts in benefits and wages, will be carried out together with the sale of JAL's subsidiaries including JAL Hotels Co., Kyodo News reported. The carrier's workforce will be trimmed to about 36,000 by the business year to March 2013. The state-backed Enterprise Turnaround Initiative Corp. (ETIC) plans to decide on its bailout package for JAL as early as January 19, the same time the airline is expected to file for bankruptcy protection. The ETIC estimated JAL's consolidated operating loss to expand to about 265 billion yen for the current business year to March 2010, compared with a year-earlier loss of 51 billion yen, due to a drop in passenger numbers.

- Like the GM bankruptcy case, the long decline of Japan Airlines has been noted by outside observers for a long time (see earlier posts dated Feb 2006 and Aug 2006). Traditional airlines have been finding it rather difficult in challenging business conditions in recent years, with increasingly volatile oil prices and a global recession. The rising competition from budget airlines didn't help either. Airlines like JAL and their like will need to revamp and re-invent themselves in order to stay relevant in the economic environment ahread.

(2010-01-15 19:44:02 SGT) [Biz] Permalink

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