• Not huge rush to tighten; economy clearly not overheating

• Increase in sentiment not yet translated into 'hard' data, Q1 U.S Gdp may be a bit weaker

• Could gradually trim portfolio perhaps later this year or in 2018

• Trimming balance sheet a 'substitute' for rate hikes; could 'pause' raising rates at that time

• Likely not at stage where there is great urgency to tighten policy

Personal income increased $57.7 billion (0.4 percent) in February according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $44.6 billion (0.3 percent) and personal consumption expenditures (PCE) increased $7.4 billion (0.1 percent).

Real DPI increased 0.2 percent in February and Real PCE decreased 0.1 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

Personal income increased 3.6 percent in 2016 (that is, from the 2015 annual level to the 2016 annual level), compared with an increase of 4.4 percent in 2015. DPI increased 3.9 percent in 2016, compared with an increase of 3.8 percent in 2015. In 2016, PCE increased 3.9 percent compared with an increase of 3.5 percent in 2015.

Gross domestic product grew 0.6% in January on the strength of widespread growth across both goods- and service-producing industries. With the exception of October, gross domestic product has risen every month since June 2016.

Goods-producing industries grew for the seventh time in eight months, increasing by 1.1% in January. Service-producing industries rose 0.4%, their highest monthly growth rate since June 2015.

The manufacturing sector was the largest contributor to the increase in gross domestic product, expanding 1.9% in January. With the exception of October, the manufacturing sector has grown every month since June 2016.

Durable manufacturing rose 2.0% in January, led by growth in fabricated metal, non-metallic mineral and wood product manufacturing. With the exception of miscellaneous manufacturing, all durable manufacturing subsectors rose.

Transportation equipment was up 0.6%, as growth in motor vehicle, motor vehicle body and trailer, aerospace product and parts and railroad rolling stock manufacturing was partly offset by declines in manufacturing of motor vehicle parts and other transportation equipment.

• Inflation numbers consisitent with what we say

• See very little pipeline price pressure

• Yet to be convinced that price adjustment is sustainable

• Sensitivity to downside of dfr increases over time

• How long is "well past" depends on data

• Is sure that no one will use security cooperation as bargaining chip

• Intends to visit PM May in London before april 29 summit

• Eu will not pursue punitive approach to Brexit

• Talks will be difficult, sometimes confrontational

Euro area annual inflation is expected to be 1.5% in March 2017, down from 2.0% in February 2017, according to a flash estimate from Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in March (7.3%, compared with 9.3% in February), followed by food, alcohol & tobacco (1.8%, compared with 2.5% in February), services (1.0%, compared with 1.3% in February) and non-energy industrial goods (0.2%, stable compared with February).

The UK's current account deficit was £12.1 billion in Quarter 4 (Oct to Dec) 2016, a narrowing of £13.6 billion from a revised deficit of £25.7 billion in Quarter 3 2016, due predominantly to a sharp narrowing in the deficit on Trade; the deficit in Quarter 4 equated to 2.4% of gross domestic product (GDP) at current market prices, down from 5.3% in Quarter 3.

The total trade deficit narrowed to £4.8 billion in Quarter 4 2016, following a sharp widening of the deficit in Quarter 3 2016 (£14.8 billion); this narrowing was predominantly due to an increase in the exports of goods of £7.6 billion.

UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.7% between Quarter 3 (July to Sept) 2016 and Quarter 4 (Oct to Dec) 2016, unrevised from the second estimate of GDP published on 22 February 2017; more generally, the latest GDP data for 2016 are little changed from the second estimate of GDP.

UK GDP growth in Quarter 4 2016 saw a continuation of strong consumer spending and strong output in consumer-focused industries; there has been a slowdown within business investment which fell by 0.9% driven by falls within the other buildings and structures and transport equipment assets, although this is a slightly improved picture from the second estimate of GDP, being revised up by 0.1 percentage points.

• Data points to moderate growth in q1

• Economic recovery to accelerate from mid-q2 onwards

According to the provisional estimate made at the end of March, the Consumer Price Index (CPI) should slacken again slightly (+1.1% year on year in March 2017 after +1.3% in January and +1.2% in February). This slight slowdown should be the result of these in services and energy prices, and of a sharp deceleration in food prices. These changes should be offset largely by a lesser downturn in the prices of manufactured products and an acceleration in those of tobacco.

Over one month, consumer prices should accelerate sharply: +0.6% after +0.1% in the previous month. This marked increase should come from a rebound in the prices of manufactured products after the end of winter sales and from a further rise in tobacco prices. Contrariwise, food prices are expected to drop due to fresh products prices. Energy prices should fall too, because of a downturn in petroleum products prices. Besides, services prices should slow down.

EUR/USD

Resistance levels (open interest**, contracts)

$1.0859 (754)

$1.0829 (1051)

$1.0786 (450)

Price at time of writing this review: $1.0683

Support levels (open interest**, contracts):

$1.0628 (506)

$1.0585 (755)

$1.0531 (1423)

Comments:

- Overall open interest on the CALL options with the expiration date June, 9 is 44933 contracts, with the maximum number of contracts with strike price $1,1450 (3940);

- Overall open interest on the PUT options with the expiration date June, 9 is 48701 contracts, with the maximum number of contracts with strike price $1,0350 (3832);

- The ratio of PUT/CALL was 1.08 versus 1.08 from the previous trading day according to data from March, 30

GBP/USD

Resistance levels (open interest**, contracts)

$1.2711 (868)

$1.2615 (345)

$1.2519 (834)

Price at time of writing this review: $1.2466

Support levels (open interest**, contracts):

$1.2385 (585)

$1.2289 (263)

$1.2191 (540)

Comments:

- Overall open interest on the CALL options with the expiration date June, 9 is 15622 contracts, with the maximum number of contracts with strike price $1,3000 (1240);

- Overall open interest on the PUT options with the expiration date June, 9 is 17581 contracts, with the maximum number of contracts with strike price $1,1500 (3056);

- The ratio of PUT/CALL was 1.13 versus 1.14 from the previous trading day according to data from March, 30

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

GfK's long-running Consumer Confidence Index remains stable at -6 in March. Three of the five measures stayed at the same level and two measures saw increases.

Joe Staton, Head of Market Dynamics at GfK, says:

"No real upsets this month as the Barometer continues to bump along in negative territory. Consumers remain cagey about the state of their personal finances and the general economic picture for the UK, especially as wage growth fails to keep pace with the rising costs of living. Since the Brexit referendum, household spending has been a big driver of growth, so any slump will dent future economic prospects. However, if we carry on shopping, as seen by the uptick in the Major Purchase Index, then forecasts for a post-Trigger/pre-Brexit slowdown could be proved wrong."

Home building consents rebounded in February 2017, but were up only slightly from February 2016, Stats NZ said today.

A total of 2,418 new homes were consented in February 2017 - up 1.6 percent from February 2016.

In seasonally adjusted terms, this was a 14 percent increase from January 2017. However, this only partly reversed large falls in November and December 2016.

"While we saw a strong seasonally adjusted increase this February, the actual number of homes consented was up only slightly from last year," business indicators senior manager Neil Kelly said.

• Annual house price growth softens to 3.5%

• Prices fall 0.3% month-on-month in March

• Some convergence in regional price growth, with gap between weakest and strongest performing regions narrowest since 1978

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: "The annual rate of house price growth slowed in March to 3.5%, from 4.5% in February. House prices fell by 0.3% in the month, after taking account of seasonal effects.

"There was a mixed picture across the UK in Q1. Six regions saw the pace of house price growth accelerate, six saw a deceleration and one (East Midlands) recorded the same rate as the previous quarter. Interestingly, the spread in the annual rate of change between the weakest and strongest performing regions was at its narrowest since 1978 at 6.8 percentage points - the second smallest gap on record".

According to provisional data turnover in retail trade in February 2017 was in real terms 2.1% smaller and in nominal terms 0.3% larger than that in February 2016. The number of days open for sale was 24 in February 2017 and 25 in February 2016.

Compared with the previous year, turnover in retail trade was in the first two months of 2017 in real terms 0.3% and in nominal terms 2.4% larger than in in the corresponding period of the previous year.

When adjusted for calendar and seasonal variations (Census-X-12-ARIMA), the February turnover was in real terms 1.8% and in nominal terms 2.3% larger than that in January 2017.

(pare/closed(GMT +2)/change, %)

EUR/USD $1,0681 -0,81%

GBP/USD $1,2468 +0,25%

USD/CHF Chf1,0006 +0,46%

USD/JPY Y111,84 +0,75%

EUR/JPY Y119,45 -0,05%

GBP/JPY Y139,43 +0,99%

AUD/USD $0,7645 -0,29%

NZD/USD $0,6998 -0,57%

USD/CAD C$1,3334 +0,05%

00:00 New Zealand ANZ Business Confidence February 16.6

00:30 Australia Private Sector Credit, m/m February 0.2% 0.5%

00:30 Australia Private Sector Credit, y/y February 5.4%

01:00 China Manufacturing PMI March 51.6 51.6

01:00 China Non-Manufacturing PMI March 54.2

05:00 Japan Construction Orders, y/y February 1.1%

05:00 Japan Housing Starts, y/y February 12.8% -1.1%

06:00 United Kingdom Nationwide house price index, y/y March 4.5% 4.1%

06:00 United Kingdom Nationwide house price index March 0.6% 0.4%

06:00 Germany Retail sales, real unadjusted, y/y February 2.3% 0.3%

06:00 Germany Retail sales, real adjusted February -0.8% 0.7%

06:45 France CPI, y/y (Preliminary) March 1.2%

06:45 France CPI, m/m (Preliminary) March 0.1% 0.7%

07:55 Germany Unemployment Rate s.a. March 5.9% 5.9%

07:55 Germany Unemployment Change March -14 -10

08:30 United Kingdom Business Investment, y/y (Finally) Quarter IV -2.2% -0.9%

08:30 United Kingdom Business Investment, q/q (Finally) Quarter IV 0.4% -1%

08:30 United Kingdom Current account, bln Quarter IV -25.5 -16

08:30 United Kingdom GDP, q/q (Finally) Quarter IV 0.6% 0.7%

08:30 United Kingdom GDP, y/y (Finally) Quarter IV 2.2% 2%

09:00 Eurozone Harmonized CPI ex EFAT, Y/Y (Preliminary) March 0.9%

09:00 Eurozone Harmonized CPI, Y/Y (Preliminary) March 2% 1.8%

09:00 Eurozone ECB's Benoit Coeure Speaks

12:30 Canada GDP (m/m) January 0.3% 0.3%

12:30 U.S. Personal spending February 0.2% 0.2%

12:30 U.S. Personal Income, m/m February 0.4% 0.4%

12:30 U.S. PCE price index ex food, energy, m/m February 0.3% 0.2%

12:30 U.S. PCE price index ex food, energy, Y/Y February 1.7% 1.7%

13:30 U.S. FOMC Member James Bullard Speaks

13:45 U.S. Chicago Purchasing Managers' Index March 57.4 56.9

14:00 U.S. Reuters/Michigan Consumer Sentiment Index (Finally) February 96.3 97.6

14:00 U.S. FOMC Member Kashkari Speaks

21:00 United Kingdom MPC Member Andy Haldane Speaks