NEWS / Foreign Exchange

German GfK Consumer Confidence Beats Expectations for May

- The European indices are currently trading in positive territory in the session on increased earnings outlooks and expectations following favorable earnings reports from Cap Gemini, Bayer, ABB, BAS, and France Telecom.

- European government bonds are trading lower in the session following the release of stronger than expected consumer confidence data for the month of May. Similarly in the UK gilts are trading lower after Nationwide house prices exceeded expectations for the month of April.

- German GfK consumer confidence rose by more than expected to 5.5 for the month of May from 4.7 in April. Following the release GfK??™s Wuebbenhorst said that consumer confidence is a cause for optimism, noting that the indicator may rise further in the future. Wuebbenhorst attributed the rise in consumer confidence to increased conumption resulting from lower unemployment as well as improved economic sentiment.

- German import prices, which were expected to remain unchanged from February, rose to 0.6% m/m and 0.9% y/y led by copper and nickel prices.

- Nationwide house prices rose by more than expected in the UK for the month of April further supporting the case for at least a 25 basis point interest rate hike at the May 10 policy setting meeting.

- French business confidence rose to its highest level since February of 2001 during the month of April. Business confidence rose to 111, above estimates of 109 following a recent rise in production and new orders. The production outlook rose to 9, above estimates of 0, while own-company production declined by more than expected to 14.

- Swedish consumer confidence rose to its highest level since November of 2000 during the month of April. Consumer confidence rose to 23, above estimates of 16.7 boosted by increased optimism about personal finances as well as the country??™s economic outlook. - Further in Sweden, March producer prices, which were expected to decline, rose to 1.0% m/m from 0.9% in February, and to 5.2% y/y from 4.9% for the same periods.

- Regional CPI from the German state of Saxony was released overnight. This is the first of the regional CPI releases. CPI was unchanged in April at 0.3% m/m in Saxony, and declined to 2.4% y/y from 2.5% in March.

- German finance minister Steinbrueck said overnight that the German economy is in a strong upswing, noting that there are continued signs of domestic demand growth in the future. Steinbrueck said that the VAT hike did not result in a dip in Q1 growth, noting that growth was driving by both domestic and foreign demand.