TD Securities expects robust US core PCE at 0.30% month-on-month and a softer headline, alongside a rebound in JOLTS job openings to 6.8 million, slightly above consensus. They see upside risks to their inflation call and anticipate weaker University of Michigan sentiment at 54, as markets reassess inflation and growth dynamics in light of higher Oil prices.

Inflation and labour data guide Dollar

"On Friday, January PCE will be released, however given the recent concerns around inflation spiking from oil, even the February CPI print that we saw on Wednesday seems a bit stale. JOLTS is likely to print an above-consensus mark of 6800k, while we expect U Mich sentiment to surprise to the downside at 54.0."

"We expect January core PCE inflation remained strong at 0.30% m/m with a slightly weaker headline at 0.22% (cons: 0.4% and 0.3%). CPI and PPI data showed continued tariff passthrough along with strong services inflation in the month. We flag risks to the upside for our below-consensus projection."

"We also look for personal spending to moderate to 0.1% m/m in the month (cons: 0.3%). Control group retail sales moved higher but was flat in real terms. Real spending likely declined 0.1%. We also expect an acceleration in personal income to 0.5% due to strong aggregate payroll income and Social Security COLA (cons: 0.5%)."

"We expect JOLTS job openings rebounded to 6,800k in January, slightly above consensus (cons: 6,750k). Job openings declined sharply in December below other private sector indicators. We expect a rebound that's still in line with the recent downtrend. The hiring and layoffs rate will be key indicators in the report as well."

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