Overnight in Singapore, the euro got support from a statement in the German newspaper Handelsblatt by German ECB board member Stark, who said too-low rates could help cause an asset bubble and might allow banks to avoid cleaning up their balance sheets. We still have some room to move rates downfurther, but from today's perspective it does not make sense to define a limit. For me personally, however, the limit is not far from what we have at the moment.

This implies a positive yield differential against U.S. paper for some time to come.

Yesterday, Swiss National Bank President Roth said the bank will act again if the Swiss franc rises too much against the euro. Since the euro is on a rising trend against the dollar, his words have implications for the USD/Chf pair, too.

We would be foolish, as a small and open economy, to try to gain competitiveness through the currency. This is not a beggar-thy-neighbour policy. It’s just to protect the Swiss economy from deflation,“ he said during an interview with The Financial Times.”

The usual thing to do would be what other Central Banks are doing; printing money.

“Although we have lowered interest rates aggressively since October, all our actions havebeen neutralised by foreign exchange developments. We concluded we had to do something. We have consistently said we will prevent a strengthening of the Swiss franc, he said.

Separately, the Swiss government announced a new GDP forecast for a contraction of 2.2% this year and barely-there growth of 0.1% in 2010. This more than doubles the Dec forecast. According to Bloomberg, Q4 contraction was 0.3%, with industrial production shrinking 5.9%. Exports will drop 8.1% this year, with investment down 10% and the unemployment rate up to 5.2% in 2010.

In Europe, officials are still rebutting the idea that they are unwilling to participate in global stimulus to protect their precious debt-to-GDP ratios. A European Commission spokesman asserted that when you count the automatic stabilizers (expanded unemployment and health benefits), the total European stimulus could reach 4% of GDP.

Rebutting charges of denial and delay, ECB policy board member Mersch told CNBC that most European governments have acted quickly. The ECB doesn’t have a “religious approach” to a zero rate policy and is only interested in an effective interest rate policy.