DAILY CURRENCY UPDATE
Euro near 9-year lows as falling oil spurs deflation fears
The euro was trading close to nine-year lows against the dollar on Tuesday as the rout in oil prices continued, fuelling fears over the impact on global growth and inflation. EUR/USD was down 0.31% to 1.1795, not far from last Thursday’s lows of 1.1753, the weakest since December 2005.
Crude oil prices fell to almost six-year lows on Tuesday, pressured lower by concerns over a global supply glut. The rout in oil prices has fuelled concerns of exacerbating already low levels of inflation in many major world economies, including the euro zone. Data last week showed that consumer prices in the euro area fell 0.2% in December from a year earlier, the first fall in the annual rate of inflation since October 2009. The European Central Bank targets inflation of close to but just below 2%.The annual rate of U.K. inflation slowed to 0.5% last month from 1.0% in November. Economists had expected a smaller decline to 0.7%.
Crude oil prices fell to almost six-year lows on Tuesday, pressured lower by concerns over a global supply glut. The rout in oil prices has fuelled concerns of exacerbating already low levels of inflation in many major world economies, including the euro zone. Data last week showed that consumer prices in the euro area fell 0.2% in December from a year earlier, the first fall in the annual rate of inflation since October 2009. The European Central Bank targets inflation of close to but just below 2%.The annual rate of U.K. inflation slowed to 0.5% last month from 1.0% in November. Economists had expected a smaller decline to 0.7%.
Sterling nears 18-month lows after UK inflation data
The pound fell against the dollar on Tuesday, closing in on 18-month lows after data showing the annual rate of inflation in the U.K. slowed to the lowest in 14 years last month.
GBP/USD was down 0.56% to 1.5083 from 1.5151 ahead of the data, not far from last week’s 18-month trough of 1.5033.
The annual rate of consumer inflation slowed to 0.5% last month the Office of National Statistics said, down from 1.0% in November. It was the lowest rate of inflation since May 2000. Economists had expected a smaller decline to 0.7%.
In addition, transport costs fell by 0.2% from a month earlier, due to falling petrol and diesel prices. The slowdown in inflation sent the pound lower as it underlined expectations that the Bank of England will keep interest rates on hold at record lows for most of this year.
Core inflation, which strips out more volatile food and energy costs rose 1.3% last month, up from 1.2% in November, but below forecasts for a reading of 1.4%. The retail price index increased 1.6% in December, broadly in line with forecasts. The data also showed that the house price index climbed 10.0% in November, below expectations for a gain of 11.1% and down from 10.4% in October.
GBP/USD was down 0.56% to 1.5083 from 1.5151 ahead of the data, not far from last week’s 18-month trough of 1.5033.
The annual rate of consumer inflation slowed to 0.5% last month the Office of National Statistics said, down from 1.0% in November. It was the lowest rate of inflation since May 2000. Economists had expected a smaller decline to 0.7%.
In addition, transport costs fell by 0.2% from a month earlier, due to falling petrol and diesel prices. The slowdown in inflation sent the pound lower as it underlined expectations that the Bank of England will keep interest rates on hold at record lows for most of this year.
Core inflation, which strips out more volatile food and energy costs rose 1.3% last month, up from 1.2% in November, but below forecasts for a reading of 1.4%. The retail price index increased 1.6% in December, broadly in line with forecasts. The data also showed that the house price index climbed 10.0% in November, below expectations for a gain of 11.1% and down from 10.4% in October.
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