Eurozone annual inflation in April was 0.3%, the lowest level in nearly four years, while UK inflation fell below 1% to its lowest in nearly four years.
Eurozone annual inflation is at the lowest level in nearly four years, according to final data released on Wednesday by Eurostat. The Statistical office of the European Union revised down its earlier estimate as energy prices fell more than initially expected.
Eurostat had previously estimated that consumer prices in the 19-nation currency bloc rose 0.4% on the year in April. But on Wednesday the EU statistics agency lowered the figure to 0.3%, the lowest since August 2016.
Headline inflation confirmed its slowing trend since the start of the year, dropping from 0.7% in March, 1.2% in February and 1.4% in January. The revision was caused by a larger-than-expected fall in energy prices, amid the coronavirus crisis and the oil price war.
The UK Inflation sank to 0.8% in April, its lowest since August 2016.
The drop in the UK inflation fueled speculation the Bank of England would cut interest rates below zero. BoE follows the major central banks’ trend to bolster an economy hammered by the coronavirus pandemic. Further, investors clung to hopes of a recovery from a looming coronavirus-fueled recession amid signs of more stimulus.
In a related move, the Bank of Japan will hold an emergency policy meeting on Friday to set up a reward scheme. Such scheme for financial institutions boosts lending to small firms hit by the coronavirus pandemic.
START TRADINGForex – Eurozone and UK April inflation down
Investors weigh hopes of a revival in business activity amid easing lockdowns. Broader currency market volatility fell to its lowest level in more than two months. Investors waited for the outcome of the Federal Reserve’s policy minutes from its last meeting.
The euro’s modest gains pushed the U.S. dollar on to the back foot, with the greenback holding near a three-week low of 99.225 hit in the previous session.
Against the yen, the euro stood near five-week highs of 118.20 yen. The U.S. dollar tacked on 0.1% against the yen to 107.78 yen, near a five-week high of 108.085 hit in U.S. trade on Tuesday.
The euro extended gains, climbing towards a two-week high, as a Franco-German proposal for a common fund boosted demand for the currency. The common currency edged up 0.2% to $1.0960, near to a two-week peak of $1.09755 reached on Tuesday. Breaking that level could open the way for a test of its May 1 high of $1.1019.
Sterling edged up against the U.S. dollar and was steady versus the euro. Sterling recovered as the dollar fell, last trading up 0.1% against the dollar and flat at 89.24 pence versus the euro.
In the commodity markets, oil prices firmed on signs of improving demand and a drawdown in U.S. crude inventories. But worries over the economic fallout from the coronavirus pandemic and weak refining margins capped gains.
Brent crude futures were up 86 cents, or 2.48%, at $35.51 per barrel at 1219 GMT. U.S. WTI July crude futures CLc1 were up 75 cents, or 2.35%, at $32.71 a barrel.
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Sources: Reuters, Investing, CNN money