USD: Data-heavy week shapes macro narrative – TD Securities

TD Securities strategists Oscar Munoz and Eli Nir outline a busy United States (US) data calendar that will guide US Dollar (USD) traders, including Gross Domestic Product (GDP), Personal Consumption Expenditures (PCE) Price Index inflation, ISM manufacturing and consumer confidence. They expect Q1 GDP to rebound to 2.2% q/q annualized, core PCE to ease, and ISM manufacturing to improve, while Iran-related oil and tariff shocks temporarily lift headline inflation and weigh on real spending.

Growth rebound but stagflationary risks

"This week’s data will capture early effects of the Iran conflict. March core PCE should ease on limited tariff passthrough, with headline inflation reflecting the oil shock. Nominal spending will be boosted by prices, though real spending likely stayed modest."

"We look for core PCE inflation to moderate to 0.26% m/m due to a modest tariff passthrough (3.2% y/y). Headline was likely strong at 0.64% due to the oil shock (3.5%). Personal spending was likely high at 0.7% due to headline inflation, while real spending remained modest at 0.1%."

"GDP growth will likely bounce back to 2.2% q/q AR after slowing to 0.5% in Q4. A rebound in government spending post-shutdown will likely drive the increase. Consumer spending likely cooled to 1%."

"ISM manufacturing will likely rise to 53.5 despite higher input costs weighing on respondent comments, while consumer confidence likely slips on higher gasoline prices."

"Other key data this week includes durable goods orders, trade data, housing data, and regional Fed surveys."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)