Banda Asia: Multiple positive factors support the USD index, pushing it to a 10-month high

On March 16, the UK’s Office for National Statistics released the latest data showing that in January 2026, the UK GDP grew by 0% month-on-month, significantly below economists’ forecast of a 0.2% increase in a Reuters survey, and also below the revised 0.1% in December last year. This data casts a shadow over the economic outlook for this year, compounded by external energy shocks, with economic uncertainties continuing to intensify.

In terms of core economic indicators, the UK’s January GDP annual growth rate was 0.8%, below the market expectation of 0.9%, slightly up from the previous 0.7%. However, the monthly growth was 0%, which not only fell short of economists’ forecast of a 0.2% increase but also below December’s 0.1%.

Component data shows that the main engines of the UK economy are generally weak. The January services index grew by 0.9% annually, below the expected 1.0%; manufacturing output increased by 1.3% annually, short of the expected 1.5%; industrial output rose by only 0.4% annually, also below the expected 0.6%. Despite revisions to previous figures, the overall slowdown trend remains clear.

Additionally, the U.S. Bureau of Economic Analysis (BEA) released data on Friday showing that the real GDP growth rate for Q4 2025 was significantly revised downward, with the slowdown far exceeding initial estimates, highlighting the impact of the government shutdown. On March 13, the BEA’s second estimate for Q4 GDP showed an annualized growth rate of 0.7%, down 0.7 percentage points from the initial estimate of 1.4%, sharply falling from the strong 4.4% in the previous quarter. This revision was mainly due to broad downward adjustments in exports, consumer spending, government expenditure, and investment data. Notably, the BEA estimates that the ongoing federal government shutdown from October to November 2025 reduced the quarterly real GDP growth by about 1.0 percentage point. The GDP data release itself was affected by the government shutdown. The BEA stated that the second estimate for Q4, originally scheduled for release on February 26, 2026, was delayed due to the shutdown from October to November 2025.

Today’s key data releases include the U.S. March New York Fed Manufacturing Index, Canada’s February unadjusted CPI year-over-year, and U.S. February industrial production month-over-month.

Dollar Index

Last Friday, the dollar index rose sharply, breaking above 100.00 and reaching a 10-month high, with the spot price around 100.30. Besides ongoing geopolitical tensions and trade uncertainty fueling safe-haven demand, investor expectations of Fed rate cuts have also cooled, supporting the dollar’s rise. Additionally, after breaking the 100.00 resistance, some technical buying entered the market, providing further support. Today, focus on resistance around 100.80, with support at approximately 99.80.

EUR/USD

Last Friday, the euro declined, narrowly holding above 1.1400 and hitting a 7-month low, with the spot around 1.1450. The strong dollar, driven by safe-haven demand and the cooling of Fed rate cut expectations, was the main reason for euro weakness. Moreover, after breaking below the 1.1300 support level, technical selling intensified the euro’s decline. Today, watch resistance near 1.1550, with support around 1.1350.

GBP/USD

Last Friday, the British pound declined, falling below 1.3300 and hitting a 14-week low, with the spot around 1.3250. The dollar’s rally, supported by easing expectations of Fed rate cuts and rising risk aversion, was the main driver. Additionally, the overall weak economic data from the UK released during the period also weighed on the pound. However, expectations that the Bank of England will hold rates steady in March limited further declines. Today, focus on resistance near 1.3350, with support around 1.3150.