TD Securities strategists Oscar Munoz and Eli Nir highlight a pivotal week for the US Dollar (USD), as a series of major economic data releases are set to shape the macroeconomic narrative. The data calendar includes first quarter Gross Domestic Product (GDP), the Personal Consumption Expenditures (PCE) Price Index, ISM manufacturing, and consumer confidence figures, all of which are closely watched by market participants [1].
TD Securities expects Q1 GDP to rebound to 2.2% quarter-on-quarter annualized, following a slowdown to 0.5% in Q4. This rebound is anticipated to be driven primarily by increased government spending after the end of the government shutdown, while consumer spending is projected to cool to 1% [1].
On the inflation front, March core PCE is forecast to moderate to 0.26% month-on-month, with a year-on-year rate of 3.2%, reflecting limited tariff passthrough. However, headline PCE inflation is expected to be strong at 0.64% month-on-month (3.5% year-on-year), mainly due to the recent oil shock related to the Iran conflict and temporary tariff effects. Personal spending is likely to be high at 0.7% due to headline inflation, but real spending is expected to remain modest at 0.1% [1].
TD Securities also anticipates that ISM manufacturing will rise to 53.5, despite higher input costs affecting respondent comments. Meanwhile, consumer confidence is likely to slip, attributed to higher gasoline prices. Other important data releases this week include durable goods orders, trade data, housing data, and regional Federal Reserve surveys [1].
CONCLUSION
A data-heavy week is expected to provide crucial insights for USD traders, with a rebound in GDP and persistent inflation pressures in focus. While headline inflation is temporarily elevated due to oil and tariff shocks, core inflation is seen moderating. Market participants will closely monitor these releases for signals on growth and inflation trends.