Asian stocks fluctuated as energy and metal prices dragged markets down but positive earnings reports showed signs of improvement with the MSCI Asia Pacific index rising 0.4% amid pressures that faster-than-expected economic growth in China will add cause for tightening policies, Nikkei dropped 0.5%, Hang Seng rose 0.45% and Shanghai Composite rose 1.1%. South Korean GDP rose 0.5% (MoM) (prev. 0.7%, exp. 0.4%) and 4.8% (YoY) as economic growth slowed on reduced investments, increasing chances that the central bank will hold interest rate hikes.

EURUSD traded near a two-week high at 1.3704 before reports tomorrow would show economic confidence in EU improved for an eighth month, USDJPY declined to a one-week low at 81.99 as President Obama called for a freeze on spending and GBPUSD traded near a two-week low at 1.5776 as reports today could show home-loan approvals declined adding pressures on the BOE to keep interest rates low. There could be more upside swings for the Euro as economic data from EU are positive in outlook as consumer sentiment probably rose to 106.7 (prev. 106.2) and the EFSF raised 44.5 Billion Euro after sale of bonds which is intended to raise money for Irish bailout.

President Obama said that the U.S. deficit is unsustainable as he called for a freeze of some federal spending while keeping up investments that will assure competitiveness globally. He proposed a freeze on non-defense discretionary spending that would save $400 billion over the next decade and endorsed making additional cuts of $78 billion in the defense budget, the Fed officials conclude their meeting and would announce the interest rate decision and QE2 measures today and US GDP figures to be released on Friday are keeping markets on the edge. The Fed will auction $35 Billion of securities today and have shown no indication of scaling back their plans to purchase $600 Billion of bonds till June. New home sales probably climbed 3.5% to 300,000 (YoY) due out today which could add more impetus to the weak housing market data from the US.

Germany releases import price index, UK releases the BOE minutes of rate decision meeting, home-loan approval data, US releases new home sales data, oil inventory data and the all important Fed interest rate decision.