- Fed's Plosser is worried about the U.S. economic outlook: Plosser said that the U.S. economy is not as strong as the Fed expected two months ago, adding that prices are higher than they expected. On the U.S.-China trade dispute, Plosser said that any pullout of foreign dollar-based holdings would be manageable. In related news on the U.S. housing market outlook, the CEO of KB Homes said: "I think we're still early in the cycle here. I think it's going to be tougher for a little while before it gets better but there will come a day when it gets better, because the underlying demographics in job growth are there."

- Japanese machine orders disappoint, but volatility of data series cited for decline: (JP FEB MACHINE ORDERS MOM: -5.2% V -0.4% expected; YOY: -4.2% V 0.8% expected) February core orders, which exclude those for ships and machinery at electric power firms, fell 4.2% in February vs. +0.9% expected. In the moments after the release, EUR/JPY hit an all-time high. This data shows that Japanese firms plan to reduce capital spending over the next 6mnths, in conflict with the conclusions of the Tankan survey. The consensus is that Japanese firms are worried about the extent of the U.S. slowdown, leading to more conservative capital spending. Analysts add greater weight to the Tankan survey indications, saying that it is unlikely that capital investment would decline dramatically in the near-term.

- Japanese trade surplus comes in wider than expected in February: (JP FEB CURRENT ACCOUNT: ??2.42T V ??2.3T expected; ADJUSTED CURRENT ACCOUNT: ??1.5T V ??1.69T expected) The weak JPY continued to benefit Japanese exporters, as exports increased 9% on a y/y basis, the biggest ever increase for a February. Imports also rose to a record for the month.

- Forex: The USD was slightly higher against the major currencies, but the GBP gained against the USD on a combination of news. The FT reported that the UK Treasury is expected to propose a plan that would allow UK-based multinationals to repatriate foreign profits free of tax. The move is expected to improve UK competitiveness against other European countries. The British Retail Consortium (BRC), the UK'S largest trade association, said that March same store sales climbed sharply. (UK BRC MARCH SSS UP 3.9 % y/y v 3.1% expected; March Total Sales up 6.2% y/y v 5.6% in Feb). The BRC recently said that British shoppers are expected to spend a record ??7.8B this Easter, so we are likely to see the strong March spending momentum continue in April. The continuing strength of the UK consumer is seen as adding ammunition for MPC hawks in arguing for a rate hike at their next meeting. Note that there has recently been low correlation between BRC retail sales figures and official retail sales. In other forex news, the CAD could not hold on to gains against the USD, and the next downside target for USD/CAD is C$1.1441 (the 200-day moving average). Aussie trade minister said that the high AUD is a reflection of the Aussie economy. In G7 news, Japan's chief cabinet spokesman Shiozaki reiterated Japan's stance that currencies should reflect fundamentals, adding that it is up to the market to decide on currency rates.

- Equities: The Nikkei 225 opened in positive territory but gave up most of its gains after Plosser's comments re-ignited fears over the health of the U.S. economy. Gains on the Nikkei were led by property shares on expectations that commercial real estate demand in Tokyo will continue to be strong. Japanese gains were offset by declines in shares of machinery makers. The ASX 200 is higher on gains in mining shares as copper prices continue to rally. South Korea's Kospi is higher by more than 1%. The Kospi rose to a new record high on gains in shares of LG Philips after better-than-expected earnings. LG Philips led most South Korean technology shares higher, including Hynix Semiconductor and Samsung Electronics. Chinese equities are higher for the 8th consecutive session, while shares in Hong Kong rose for the 5th consecutive session.

- Commodities: Spot gold is slightly lower as the USD is rebounding in Asian trading. Crude oil is little changed, after rising during the US session on expectations that gasoline inventories will decline. Spot gold is holding below $681.50, while crude oil is just below $62. Copper prices are near 6-month highs as China' recent trade balance data showed that the country's appetite for copper continues to grow, but some traders believe that copper prices may pull back as Chinese copper consumers seek to increase the usage of cheaper copper substitutes given the sharp recent rise in copper prices.