Swiss GDP Contracted Most In 15 Years, But Less Than Expected

[B]Fundamental Headlines[/B]

[I]• GM Collapses Into Government’s Arms – Wall Street Journal
• Robust output data boost markets – Wall Street Journal
• Geithner calls for closer ties with China – Financial Times
• Morgan Stanley Plans to Sell $2.2 Billion Stock to Repay Government Funds – Bloomberg
• Barclays Abu Dhabi Investors to Sell $6.8 Billion in Stock After 54% Gain – Bloomberg[/I]

[B]USDCHF[/B] – Swiss 1Q GDP contracted by 0.8% following a 0.6% which was the most in 15 years. However, it beat estimates of -1.5% which could be a sign that the economy is starting to stabilize. The one concern was that the fourth quarter reading was revised lower from -0.3% to -0.6% leaving a bigger hole for the economy to dig isled form under. Meanwhile, the SVME-PMI reading rose to 39.8 from 34.7 as output jumped from 32.9 to 43.7. The pickup in activity is another sign that the downturn is slowing. The SNB has traditionally kept their rates low as they desire a weak Swiss Franc in order to encourage demand for exports, so we could start to see the country’s currency start to lose ground as interest rate expectations rise for other countries. For more news and resources, visit the Swiss Franc Currency Room.

[B]GBPUSD[/B] – Mortgage approvals in the U.K. rose to 43,201 from 40,038 in March as thawing credit markets have started to lead to banks increasing their willingness to lend. Net consumer credit also rose by 0.3% as rising confidence has started to filter through to consumer consumption. The most encouraging data on the day is the jump in construction activity to 45.9 from 38.1, as a dearth in capital investment had been dragging the economy lower. The BoE will most likely stand pat at Thursday rate decision as they look to assess the impact of their aggressive monetary policy. For more news and resources, visit the Pound Currency Room.

[B]EURUSD[/B] – Euro-zone unemployment rose to 9.2% from 8.9% as companies have been forced to cut expenses as they face slumping demand and shrinking profit margins. French producer prices fell more than expected by 0.9% versus expectations of -0.2% which will add to deflation concerns. The ECB is expected to leave their benchmark rate unchanged at their Thursday meeting, but will outline the details of their covered bond purchase program. Discuss the topic and your trade ideas in the EUR/USD Forum