European session review: the dollar rose strongly against major currencies

During today's European trading, the dollar rose as Treasury yields returned to recent highs, but it still looks set to fall for the first time in three weeks. 

The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), rose 0.42%.

The euro and the pound were also in the spotlight after the ECB meeting and the publication of data on the growth of the UK economy.

According to the report from Office for National Statistics, UK gross domestic product (GDP) is estimated to have fallen by 2.9% in January 2021, as government restrictions reduced economic activity. Economists had expected a 4.9% decrease. The output approach to GDP shows that January’s level was 9.0% below that seen in February 2020 and was 4.0% below levels seen in October 2020, the initial recovery peak. Overall, all main sectors of GDP remained notably below their pre-pandemic (February 2020) levels and all were lower than in October 2020. GDP contracted by 1.7% in the three months to January 2021, down from a 1.0% growth in the three months to December 2020.

Euro fell by 0.45% against the dollar after the European Central Bank said on Thursday it would accelerate emergency purchases of debt securities in the next quarter to combat rising European bond yields.

The euro was slightly supported by industrial production data. According to the report from Eurostat, in January 2021, the seasonally adjusted industrial production rose by 0.8% in the euro area and by 0.7% in the EU, compared with December 2020. Economists had expected a 0.2% increase in the euro area. In December 2020, industrial production fell by 0.1% in the euro area and remained stable in the EU. In January 2021 compared with January 2020, industrial production increased by 0.1% in the euro area and by 0.3% in the EU.