Euro Slides Below $1.15 ahead of ECB Meeting

The euro fell Friday against the dollar on growing expectation that the European Central Bank will launch stimulus next week to jump-start the ailing eurozone economy.

The euro fell below $1.15 for the first time since November 2003, before recovering to trade at $1.1566 around 2200 GMT. Late Thursday the shared European currency traded at $1.1623.

Official European Union data reported Friday further fueled speculation that the ECB will announce a large asset-purchase program after its monetary policy meeting Thursday to counter the risk of deflation in the 19-nation currency bloc.

Eurostat confirmed prior data showing that eurozone inflation fell into negative territory in December, with consumer prices down 0.2 percent. On a year-over-year basis, inflation was the weakest since September 2009, at 0.8 percent well below the ECB's target of close to 2.0 percent.

 Kathy Lien of BK Asset Management said in a market note that the question that everyone is now asking is whether the euro "will turn into another big loser" like oil and copper "or a big winner that will save funds at the brink of collapse" after the Swiss National Bank removed its cap on the franc's rate with the euro.

"Smart investors won't wait that long for an answer because since June, the euro has fallen more than 15 percent against the U.S. dollar with approximately half of those losses incurred over the past four weeks."

The SNB scrapped its three-year bid to stop the franc from strengthening, allowing it to soar by 30 percent before it eased back to a 16 percent gain against the euro.

On Friday, the euro was down a further 0.9 percent, at 0.9948, in late trade.

"With arguably the biggest bull in the euro market no longer supporting price, no wonder EUR-crosses have collapsed in the wake of the SNB's latest decision," said Christopher Vecchio of DailyFX.

 

2200 GMT    Friday     Thursday

EUR/USD      1.1566    1.1623

EUR/JPY        135.87    135.12

EUR/CHF      0.9948     1.0035

EUR/GBP      0.7637     0.7656

USD/JPY       117.46     116.25

USD/CHF      0.8597    0.8632

GBP/USD      1.5144    1.5181

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