Euro slides after SNB, pressure remains ahead of ECB

The Swiss National Bank unexpectedly decided on Thursday to end its three-year policy of keeping the Swiss franc from appreciating beyond 1.20 per euro. This led to a tumble on the EUR/CHF down to a record low of 0.9650 by early Friday trading.

Bearish bets on the euro have now soared, as the single currency plunged 3.5 percent against a basket of ten major currencies, the most since the euro was established in 1999.

The SNB’s decision removes a key pillar of support for the euro, boosting the odds that its recent slide will accelerate.

The SNB capped the franc’s value in 2011 as the Eurozone debt crisis prompted an exodus from euro-denominated assets. The cap of 1.20CHF weathered the conflict in Ukraine and years of extraordinary stimulus from the European Central Bank that boosted investor demand for the franc as a haven.

Switzerland simply decided it no longer wanted to spend billions of dollars defending the 1.20 cap, particularly with expectations that the European Central Bank will unleash more quantitative easing at its next policy meeting on January 25.

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Source:: Euro slides after SNB, pressure remains ahead of ECB

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