The euro is getting smoked.
In late morning trade on Friday, the euro was making new lows against the US dollar, falling to below 1.15 against the dollar, the lowest level in 11 years.
The tumble in the euro on Friday comes after Thursday’s surprise announcement from the Swiss National Bank that saw the SNB abandon its peg of 1.20 against the euro.
The SNB’s pegging was meant to weaken the Swiss franc against the euro to make it more attractive to potential trade partners, but as the euro has weakened considerably, the SNB had increasing difficulty maintaining its peg and abandoned this strategy. Following that announcement, the franc strengthened dramatically, and on Friday it had moved back to parity, or a 1:1 ratio, against the euro.
Earlier on Friday, Marc Chandler at Brown Brothers Harriman told Bloomberg Radio that he sees the euro going to parity against the dollar in 2016, and added that the strength in the US dollar with force a stock market correction. A correction is defined as a decline of at least 10% from peak-to-trough.
On Friday, markets were still digesting the ramifications of the SNB’s actions, with US currency broker FXCM currently halted for trade, pending news, after announcing a $US225 million loss on Thursday, while US trading platform Interactive Brokers said it lost $US120 million following the developments.
So, crazy currency markets right now.