Asian Market Update: USD upside limited ahead of consumer confidence data - Forex: The USD regained some losses during Asia, but if there is any upside for the USD it would appear at this stage to be more as a correction rather than a reversal of the current downward trend. Any USD gains are expected to be limited ahead of consumer confidence data tomorrow, with many analysts saying we have not yet seen the bottom of the USD. Some suggest that high yielding currencies, like the NZD, look vulnerable in the near term if Bernanke had to say something to cause investors to get more nervous. The CAD showed little response to the latest projections on the Quebec elections. Quebec's ruling Liberal Party has lost its majority and voters have elected a minority government, though it was unclear whether it would be the separatist Parti Quebecois, the Liberals or the conservative Action Democratique. - Renewed concerns over U.S. housing market: Traders continue to trade cautiously as there are signs of subprime troubles spilling over into other parts of the U.S. economy like auto loans. The WSJ is reporting that New Century may file for bankruptcy in the near future after moves by Morgan Stanley and Barclays to take possession of loans used to secure their financing. Stock market bulls now place their hopes on Bernanke's testimony on Wednesday before the Joint Economic Committee. After surprising the markets with last week's move to a more neutral stance regarding future policy decisions, the consensus is that Bernanke will echo comments from other Fed officials (Fed's Moskow: Does not see subprime loan woes affecting other parts of the US economy). From Bernanke's point of view, he needs to be comforting to prevent a massive overreaction to the current run of bad news. - Asian Development Bank is bullish on China growth prospects: The ADB boosted its 2007 Chinese growth forecast to 10% from prior projection of 9.5%. The ADB also raised its 2007 developing Asia growth forecast to 7.6% v 7.1% prior projection. - Worries over health of U.S. economy drive Asian equities lower: The Nikkei 225 opened lower by more than 0.70% but rebounded strongly as traders were reassured by U.S. stock futures moving back above key moving averages towards the end of the U.S. session. Gains on the Nikkei 225 are being led by mining and real estate shares. Gainers also included shares of Konica on reports that it has formed a partnership with GE. Nippon Steel traded higher on speculation that it may establish a joint venture with India's Tata Steel. Declines on the Nikkei were seen in pharmaceutical and transportation shares. The Kospi index is slightly higher as gains in shares of Posco offset losses in shares of Samsung and LG Philips. The ASX 200 index is slightly lower by about 0.10%, driven by declines in U.S.-exposed shares such as Rinker and James Hardie. Chinese equities are fluctuating between gains in losses in a volatile trading session. - Commodities: Crude oil prices are slightly lower in Asia after climbing to a 3-month high during the U.S. session. The consensus is that some of the political risk premium is coming back into oil prices. The Iranian central bank chief said that Iran has ample fx reserves to handle any major shocks. Spot gold is also seeing light profit-taking in Asia after being bid up after today's U.S. housing data, weaker USD and higher crude prices. Shanghai copper is higher by more than 1% after the LME copper contract hit a 2007 high.