Talking Points:

Swiss Franc Unlikely to Find Strength in Upbeat 1Q GDP Report
Euro Sellers to be Undeterred by Drop in German Unemployment
NZ Dollar Drops as Business Confidence Slump Erodes RBNZ Bets

Switzerland’s GDP figures are expected to show output grew 0.6 percent in the first quarter, marking the largest increase since the three months through June 2013. The release probably won’t offer meaningful direction cues to the Swiss Franc considering its limited implications for SNB monetary policy. Indeed, with the central bank forecasting inflation below 1 percent through 2015, Thomas Jordan and company seem unlikely to step away from an ultra-accommodative policy regime for some time yet. Technical positioning warns of deeper Franc losses ahead.

Germany’s Unemployment report may likewise pass with little fanfare. Jobless ranks in Eurozone’s largest economy are expected to contract by a further 15,000 in May, marking the sixth consecutive monthly decline. While signs of improvement in the German labor market are certainly not a Euro-negative, their ability to positively influence the single currency seem limited as speculation about an expansion of ECB stimulus as soon as next week continues to build. We remain short EURUSD.

The New Zealand Dollar underperformed in otherwise quiet overnight trade, falling as much as 0.3 percent on average against its leading counterparts. Negative economic news-flow drove the selloff: the ANZ Business Confidence gauge fell to 53.5 in May from 64.8 recorded in April, marking the worst reading in six months. The Kiwi’s decline tracked a slide in New Zealand’s benchmark 10-year bond yield, hinting the dour news release undermined RBNZ interest rate hike expectations. NZDUSD is eyeing key support near the 0.85 figure having found a topped at the beginning of the month.

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